How it's calculated
Calculator uses the standard reducing-balance EMI formula — the same one banks use. Interest is charged only on the outstanding balance each month, which is why the interest slice of your EMI shrinks over time while the principal slice grows.
P = loan principal · r = annual rate ÷ 12 ÷ 100 · n = total monthly payments
Worked example: a $250,000 loan at 8.5% annual interest over 20 years gives r = 0.007083 and n = 240, so EMI ≈ $2,169.56. Total interest comes to about $270,694 — more than the amount borrowed. Shortening the tenure to 15 years raises the EMI to about $2,461.85 but drops total interest to roughly $193,133.
Frequently asked questions
What is EMI?
EMI (Equated Monthly Instalment) is the fixed amount you pay your lender every month until the loan is fully repaid. Each EMI has two parts: interest on the outstanding balance and a slice of the principal. Early in the loan, most of the EMI goes toward interest; later, most of it repays principal.
How is EMI calculated?
EMI = P × r × (1+r)n ÷ ((1+r)n − 1), where P is the loan principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. This is the standard reducing-balance formula used by banks worldwide.
Does a longer loan tenure reduce my EMI?
Yes — spreading the same loan over more months lowers each EMI, but you pay interest for longer, so the total interest cost rises sharply. A shorter tenure means higher EMIs but much less total interest. Use the calculator above to compare tenures side by side.
What is an amortization schedule?
An amortization schedule is a table showing every payment of your loan: how much of each EMI goes to interest, how much repays principal, and the remaining balance after each payment. It makes the true cost of a loan visible month by month.
Disclaimer: Our calculators are for education and planning only. Results are estimates based on your inputs and the standard formula shown — they are not financial advice. Actual loan terms, fees and taxes vary; confirm figures with your lender or a licensed financial adviser before deciding.
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