Skip to content
BA Convert

How to Calculate EMI (Formula and Example)

By Betsan · Updated 15 October 2026 · 5 min read

EMI (equated monthly instalment) is the fixed amount you pay every month to repay a loan with interest. Banks use one standard formula, and once you understand it you can see why rate and tenure matter so much.

Open EMI Calculator →Loan EMI with full schedule and prepayment. Free, files stay on your device.

The EMI formula

EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). P is the amount borrowed, r is the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n is the number of monthly instalments.

Worked example: ₹25 lakh home loan

For ₹25 lakh at 8.5% a year for 20 years: r = 8.5 ÷ 12 ÷ 100 = 0.007083 and n = 240. Putting these into the formula gives an EMI of about ₹21,696. Over 240 months you pay about ₹52.1 lakh, so roughly ₹27.1 lakh is interest.

What changes your EMI

  • Rate: at 8.5% for 20 years, a ₹10 lakh home loan costs about ₹8,678 a month; each 0.5% more adds roughly ₹300 a month.
  • Tenure: the same ₹10 lakh over 15 years is about ₹9,847 a month, but total interest falls from about ₹10.8 lakh to about ₹7.7 lakh.
  • Prepayment: paying extra early in the loan cuts the principal on which interest is charged, which shortens the loan or reduces the EMI.

Check it with the calculator

  1. Open the EMI Calculator and enter the amount, rate and tenure.
  2. See the EMI, total interest and a month-by-month or yearly schedule.
  3. Add a prepayment to see how much interest and how many months it saves.
  4. Download the schedule as CSV to compare loan offers in Excel.

Frequently asked questions

Why does my bank's EMI differ slightly?

Banks may round differently, charge interest from the disbursement date, or add fees and insurance. The difference is usually a few rupees; larger gaps mean the rate or tenure is different from what you entered.

Is it better to reduce EMI or tenure after prepaying?

Reducing the tenure usually saves more interest. Reducing the EMI lowers your monthly outflow. The EMI Calculator shows both so you can compare.

Tools used in this guide

EMI CalculatorLoan EMI with full schedule and prepaymentHome Loan EMIHome loan EMI, interest and scheduleCar Loan EMICar loan EMI, interest and schedulePersonal Loan EMIPersonal loan EMI, interest and schedule

Spotted something out of date? Let us know. More guides · all tools.