An Equated Monthly Installment (EMI) is a fixed payment you make to a lender each month to repay a loan over a set period. It's designed to simplify your repayment schedule by combining both the principal loan amount and the interest due into a single, predictable monthly payment.
Think of it as a consistent, manageable sum that helps you systematically pay off your debt.
Over time, the composition of your EMI changes. In the early stages of your loan, a larger portion of your EMI goes toward paying off the interest. As you continue to make payments, this proportion shifts, and a greater share of each EMI is allocated to reducing the principal balance. While the monthly amount you pay remains the same, the breakdown of principal and interest within that amount is constantly adjusting. This process is known as amortization.
The standard formula for calculating is: EMI = [P x R x (1+R)^N] / [(1+R)^N-1]
For example, if you borrow тВ╣10,00,000 at an annual interest rate of 10.5% for 10 years (120 months), your monthly EMI would be approximately тВ╣13,493. This means you will pay a total of тВ╣16,19,220 over the loan term, with тВ╣6,19,220 of that being the interest.
Calculating this manually can be tedious and prone to errors. Our EMI calculator automates this process, providing you with instant, accurate results along with a detailed amortization schedule and visual charts to help you understand your loan repayment journey.