# EMI Calculator > EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where r is the monthly interest rate and n the number of months, so a ₹30 lakh home loan at 8.5% for 20 years has an EMI of ₹26,035 and costs ₹32.48 lakh in interest. The calculator also shows the repayment schedule and the effect of a part-prepayment. - Interactive calculator: https://calculatorswithsteps.com/emi-calculator - Category: India Finance Calculators - Last updated: 2026-11-10 - Publisher: Calculators With Steps (calculatorswithsteps.com) ## How to use the EMI calculator 1. **Loan type** – choose home, car, personal or education loan. This changes the tax and prepayment notes under the result, not the maths. 2. **Loan amount** – the amount the bank actually lends you, not the price of the house or car. 3. **Interest rate** – the annual rate on your sanction letter or Key Facts Statement. 4. **Loan tenure** – enter it in years or switch to months. Use months for short loans such as a 9-month consumer loan. 5. **Part-prepayment** (optional) – add a one-time prepayment, say when you get a bonus, and choose whether to keep the EMI and cut the tenure or keep the tenure and cut the EMI. The result shows the EMI, total interest, total amount payable, a chart of principal against interest for every year, and both a yearly and a month-by-month schedule. ## EMI formula Indian banks use the reducing balance method, where interest is charged each month on the balance still outstanding: **EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)** - **P** = loan amount (principal) - **r** = monthly interest rate = annual rate ÷ 12 ÷ 100 - **n** = number of monthly instalments = years × 12 This is the same formula taught for EMI in Class 12 applied maths, and it is what Excel's PMT function uses. Each month the bank first takes interest on the outstanding balance (balance × r) and the rest of your EMI reduces the principal. Because the balance is largest at the start, early EMIs are mostly interest. ## Worked example: ₹30 lakh home loan A ₹30,00,000 home loan at 8.5% a year for 20 years: - r = 8.5 ÷ 12 ÷ 100 = 0.0070833 and n = 240 - EMI = 30,00,000 × 0.0070833 × (1.0070833)^240 ÷ ((1.0070833)^240 − 1) = **₹26,035** - Total paid = ₹62,48,327, so total interest = **₹32,48,327**, more than the loan itself In the first EMI, interest is ₹21,250 (30,00,000 × 0.0070833) and only ₹4,785 goes to principal. ## How tenure and rate change your EMI | ₹30 lakh at 8.5% | EMI | Total interest | | --- | --- | --- | | 15 years | ₹29,542 | ₹23,17,594 | | 20 years | ₹26,035 | ₹32,48,327 | | 25 years | ₹24,157 | ₹42,47,044 | | 30 years | ₹23,067 | ₹53,04,266 | Stretching the loan from 20 to 30 years lowers the EMI by only ₹2,968 a month but adds about ₹20.6 lakh of interest. The rate matters too: the same 20-year loan at 9% has an EMI of ₹26,992, so a 0.5% higher rate costs ₹957 more every month and ₹2.30 lakh more over the loan. ## EMIs for car, personal and education loans The formula is the same for every loan type; only the typical rate and tenure differ. A ₹10 lakh loan at 10% for 5 years has an EMI of ₹21,247 and total interest of ₹2,74,823. A ₹5 lakh personal loan at 12% for 3 years has an EMI of ₹16,607. Shorter loans have bigger EMIs but much less total interest. For bike, gold or business loans choose "Other loan" and enter the lender's rate. Watch for flat-rate quotes, mostly from dealers and some consumer lenders. A flat rate charges interest on the full original amount for the whole term. A 10% flat rate on a 5-year loan works out to about 17.3% a year on a reducing balance. ## Prepaying your loan A part-prepayment goes straight to principal, so every later month is charged less interest. On the ₹30 lakh loan above, paying ₹2 lakh after the 24th EMI and keeping the EMI unchanged saves **₹6,22,877** of interest and closes the loan **2 years 7 months** early. Choosing a lower EMI of ₹24,224 instead saves ₹1,91,158. RBI rules do not let banks charge prepayment fees on floating-rate loans to individuals for non-business use, so early lump sums cost nothing extra on most home loans. Compare that with investing the same money: if your loan rate is above the after-tax return you expect, prepaying usually wins. Check returns with the [SIP calculator](https://calculatorswithsteps.com/sip-calculator) or [FD calculator](https://calculatorswithsteps.com/fd-calculator). ## Tips before you borrow - **Keep EMIs within budget.** A common guideline is to keep all your EMIs together under 40% of take-home pay, which leaves room for savings and emergencies. - **Pick the shortest tenure you can afford**, then prepay when you can. - **Ask for the Key Facts Statement**, which shows the annual percentage rate including processing fees. - **Claim tax benefits under the old regime.** Home loan interest on a self-occupied house is deductible up to ₹2 lakh a year and education loan interest has no cap. The [income tax calculator](https://calculatorswithsteps.com/income-tax-calculator-india) shows whether those deductions make the old regime cheaper for you. ## Frequently asked questions ### What is the full form of EMI? EMI stands for Equated Monthly Instalment. It is the fixed amount you pay your lender every month until the loan is repaid. Each EMI has an interest part and a principal part, and the principal part grows as the balance falls. ### How is EMI calculated? EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the annual interest rate divided by 12 and by 100, and n is the number of monthly instalments. For ₹1 lakh at 10% for 12 months, r = 0.008333 and n = 12, so the EMI is ₹8,792. ### What is the EMI on a ₹30 lakh home loan? At 8.5% a year, a ₹30 lakh home loan costs ₹26,035 a month over 20 years, ₹29,542 over 15 years and ₹23,067 over 30 years. Total interest ranges from ₹23.18 lakh on the 15-year loan to ₹53.04 lakh on the 30-year loan. ### How do I calculate EMI in Excel? Use the PMT function: =PMT(rate/12, months, -loan). For a ₹30 lakh loan at 8.5% for 20 years, =PMT(8.5%/12, 240, -3000000) returns 26,035. The minus sign makes the answer positive. ### Is it better to reduce EMI or tenure after a prepayment? Reducing the tenure saves more. On a ₹30 lakh loan at 8.5% for 20 years, a ₹2 lakh prepayment after the 24th EMI saves ₹6.23 lakh of interest if you keep the EMI and finish 2 years 7 months early, but only ₹1.91 lakh if you cut the EMI to ₹24,224 instead. ### Do banks charge a penalty for prepaying a home loan? Not on floating-rate loans taken by individuals for non-business purposes. RBI rules bar banks and NBFCs from charging prepayment or foreclosure fees on these loans. Fixed-rate loans, such as most car and personal loans, may carry a charge set out in your loan agreement. ### What is a reducing balance EMI? Almost all Indian bank loans use the reducing balance method: interest each month is charged only on the principal still outstanding. A flat-rate loan charges interest on the original amount for the whole term, so a 10% flat rate costs far more than a 10% reducing rate. ### How much interest do I pay in the first year of a home loan? Most of it. On a ₹30 lakh loan at 8.5% for 20 years, about ₹2.53 lakh of the ₹3.12 lakh you pay in year 1 is interest and only about ₹60,000 reduces the principal. The split reverses only in the later years. ## Sources - [Reserve Bank of India – Pre-payment Charges on Loans Directions, 2025](https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12878) - [Equated monthly installment (Wikipedia)](https://en.wikipedia.org/wiki/Equated_monthly_installment) > Disclaimer: results are estimates for information and education, not financial advice. Confirm important decisions with a qualified professional.