Loan EMI Calculator

Calculate your monthly loan payments and view complete amortization schedule.

Loan EMI Calculator

Finance Tool
Years

Breakdown

About EMI & Loans

EMI (Equated Monthly Installment) is a fixed payment made by borrowers to lenders on a specified date each month. It includes both principal and interest components, calculated to ensure the loan is fully repaid by the end of the tenure.

Key Points:

  • Initial EMIs have higher interest, lower principal
  • Later EMIs have lower interest, higher principal
  • Total payment = EMI × Number of months
  • Prepayment can significantly reduce total interest

How EMI Calculation Works

EMI Formula:

EMI = P × r × (1+r)^n / ((1+r)^n - 1)

P = Principal loan amount

r = Monthly interest rate (annual rate ÷ 12 ÷ 100)

n = Total number of months

This formula ensures equal monthly payments while the interest and principal components vary each month. Early payments are interest-heavy; later payments are principal-heavy.

Key Insights

💰 Prepayment Strategy

Every ₹1 lakh prepaid in Year 1 can save ₹1.5-2 lakhs in interest for a 20-year loan @ 9%. Prepay early and often for maximum savings.

⏰ Tenure vs EMI Trade-off

Doubling tenure doesn't halve EMI. A 10-year vs 20-year loan difference is only ~30% in EMI but 80%+ in total interest paid.

📊 Interest Rate Impact

A 1% rate increase on ₹50 lakh loan over 20 years increases total interest by ₹10+ lakhs. Always negotiate for best rates!

Did You Know?

🏠 Home Loan Tax Benefits

Save up to ₹3.5 lakhs/year in taxes: ₹1.5L under 80C (principal) + ₹2L under 24(b) (interest). For first-time buyers, additional ₹50K under 80EEA!

🎯 The 20-Year Trap

On a ₹50L loan @ 9%, you pay ₹95L over 20 years vs ₹70L over 15 years. The "comfortable" longer tenure costs you ₹25 lakhs extra!

🔄 Balance Transfer

If rates dropped 0.5%+ since you took your loan, consider balance transfer. Even with 1% processing fee, you can save lakhs over remaining tenure.

Frequently Asked Questions About EMI & Loans

EMI is calculated using the formula: EMI = P × r × (1+r)^n / ((1+r)^n - 1), where P is principal, r is monthly interest rate, and n is number of months. This ensures equal monthly payments throughout the loan tenure.
Reducing Balance: Interest calculated on outstanding principal, which reduces with each payment. Most common and cost-effective. Flat Rate: Interest calculated on original principal throughout tenure, resulting in higher effective interest rate (~double the stated rate). Always choose reducing balance loans.
Yes, most banks allow prepayment. Home loans typically have no prepayment charges for floating rate loans, but 2-4% for fixed rate. Personal loans may have 2-5% prepayment penalty. Check your loan agreement. Even with penalties, prepayment often saves money in the long run.
Prepayment gives two options: (1) Reduce EMI - Keep tenure same, pay less monthly. Good for improving cash flow. (2) Reduce Tenure - Keep EMI same, finish loan faster. Saves more interest. Most advisors recommend reducing tenure to minimize total interest outflow.
Longer tenure means lower EMI but significantly higher total interest. Shorter tenure means higher EMI but substantial savings. Generally, choose shortest tenure you can comfortably afford. Your EMI should not exceed 40-50% of monthly income for financial stability.
Ideal EMI-to-income ratio is 30-40% of gross monthly income. Banks typically approve loans where total EMIs (all loans) don't exceed 50-60% of income. Keep it lower (30-35%) for better financial flexibility and ability to handle emergencies.
For floating rate loans, when RBI changes repo rate, banks adjust lending rates. A 0.25% rate change can impact EMI by ₹150-200 per lakh for a 20-year loan. Banks either adjust EMI or tenure. You can request to keep EMI same and adjust tenure, or vice versa.
Yes, through: (1) Refinancing - Switch to another bank offering lower rates (check processing fees). (2) Negotiation - Ask current bank to match competitor rates if you have good repayment history. (3) Balance Transfer - Move loan to bank with lower interest. Compare total costs before switching.