An Equated Monthly Instalment (EMI) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.
It's the most common way to repay loans like home loans, car loans, and personal loans. Calculating your EMI beforehand helps you understand your monthly financial commitment and choose a loan that fits your budget.
The EMI Calculation Formula
The mathematical formula used to calculate the EMI is as follows:
E = P × r × (1 + r)ⁿ / ((1 + r)ⁿ – 1)
- E is your monthly EMI payment.
- P is the Principal Loan Amount.
- r is the monthly rate of interest (annual rate / 12 / 100).
- n is the loan tenure in number of months.
Our calculator automates this formula, providing you with an instant and accurate breakdown of your loan repayments.