How your EMI is calculated
The formula is EMI = P × i × (1+i)^n / ((1+i)^n − 1), where P is the loan amount, i is the monthly interest rate (annual rate divided by 12), and n is the number of monthly payments. It is the unique fixed payment that pays the loan to exactly zero on the final month.
Because interest accrues on the outstanding balance, a longer tenure means lower monthly payments but much more total interest. A 100,000 loan at 9% costs about 900 per month over 20 years, but the total interest paid is roughly 116,000, more than the loan itself.
Reading the amortization schedule
The schedule below the results splits every year's payments into principal and interest. In year one of a 20-year loan at 9%, roughly three quarters of your payments go to interest. The crossover point, where more of your money repays principal than interest, typically arrives around two thirds of the way through the tenure.
This is why prepaying early is so powerful: any extra principal you repay in the first years would otherwise have accrued interest for decades.
Choosing the right tenure
Pick the shortest tenure whose EMI you can comfortably afford after essentials and savings. A common guideline is keeping all loan payments under 40% of take-home income. Use the tenure slider to see how the monthly payment and total interest trade off against each other.
Frequently asked questions
Does this work for home, car and personal loans?
Yes. Any amortized loan with a fixed rate and fixed monthly payments follows the same math, whatever the loan is for and whatever the currency.
Why is the total interest so high?
Interest accrues every month on the amount still owed. On long tenures the balance stays high for years, so interest accumulates substantially. Shortening tenure or prepaying principal are the two most effective ways to cut it.
What happens if interest rates change?
This calculator assumes a fixed rate. On floating-rate loans, lenders usually keep your EMI constant and extend or shorten the tenure when rates move. Recalculate with the new rate to see the updated payoff picture.
Is EMI the same as a mortgage payment?
The principal-and-interest portion, yes. In some countries the monthly mortgage bill also bundles property taxes and insurance on top. This calculator shows the loan portion only.
How can I reduce my EMI?
Three levers: a larger down payment (smaller loan), a lower interest rate (compare lenders or refinance), or a longer tenure. The first two save money; the third costs more in total interest even as the monthly payment falls.
Does paying one extra EMI a year help?
Significantly. One extra payment a year directly reduces principal, and on a 20-year loan it can typically shorten the payoff by 2 to 3 years and save a large share of interest.