What is EMI?
EMI (equated monthly instalment) is the fixed amount you pay your lender every month until a loan is repaid. Each EMI has two parts: interest on the amount you still owe, and principal that reduces the loan. In Hindi, EMI is called समान मासिक किस्त (samaan maasik kist).
The EMI stays the same every month as long as the interest rate does not change. To find yours, use the Home Loan EMI Calculator or the calculator for your type of loan.
EMI formula
Banks and NBFCs in India calculate EMI with this reducing-balance formula:
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
- P = loan amount (principal)
- r = monthly interest rate = annual rate ÷ 12 ÷ 100
- n = loan tenure in months
The same formula applies to home, car, bike, personal and education loans. Only the rate and tenure change.
How EMI is calculated on loan
To calculate EMI, convert the annual rate to a monthly rate, convert the tenure to months, and put both into the formula. Here is a ₹10 lakh car loan at 9% for 5 years:
- Monthly rate r = 9 ÷ 12 ÷ 100 = 0.0075
- Tenure n = 5 × 12 = 60 months
- (1 + r)^n = 1.0075^60 = 1.5657
- EMI = 10,00,000 × 0.0075 × 1.5657 ÷ (1.5657 − 1) = ₹20,758
Over 60 months you pay ₹12,45,501, of which ₹2,45,501 is interest. Check any car loan in the Car Loan EMI Calculator.
How EMI is calculated for home loan
Home loan EMI uses the same formula, but long tenures make the interest much larger than on other loans. For a ₹50 lakh home loan at 8%:
| Tenure | EMI | Total interest |
|---|---|---|
| 10 years | ₹60,664 | ₹22,79,656 |
| 15 years | ₹47,783 | ₹36,00,869 |
| 20 years | ₹41,822 | ₹50,37,281 |
| 25 years | ₹38,591 | ₹65,77,243 |
| 30 years | ₹36,688 | ₹82,07,762 |
Stretching from 20 to 30 years lowers the EMI by ₹5,134 but adds ₹31.7 lakh of interest.
How EMI is calculated for personal loan
Personal loan EMI is calculated the same way, at higher rates and shorter tenures. A ₹10 lakh personal loan at 12% for 5 years has an EMI of ₹22,244 and total interest of ₹3,34,667. Lenders also charge a processing fee, usually a percentage of the loan plus 18% GST, which the EMI does not show; compare offers on total cost in the Loan Comparison Calculator or work out the EMI in the Personal Loan EMI Calculator.
EMI interest and principal breakup
In the early years most of each EMI is interest, because interest is charged on a large outstanding balance. As the balance falls, the interest part shrinks and the principal part grows.
On the ₹50 lakh, 8%, 20-year home loan (EMI ₹41,822):
- First EMI: ₹33,333 interest and ₹8,489 principal
- First year: ₹3,96,181 interest and only ₹1,05,683 principal
- Month 137 (year 12): the principal part becomes larger than the interest part for the first time
This is why prepaying early in the loan saves the most interest. See how much in the Loan Prepayment Calculator.
Reducing balance vs flat rate
A reducing-balance rate charges interest only on what you still owe; a flat rate charges interest on the full loan amount for the whole tenure. The same number as a flat rate costs far more.
| ₹10 lakh for 5 years | 9% reducing balance | 9% flat |
|---|---|---|
| EMI | ₹20,758 | ₹24,167 |
| Total interest | ₹2,45,501 | ₹4,50,000 |
| Equivalent reducing rate | 9% | 15.71% |
Banks quote home, car and personal loans on a reducing balance. Some consumer, two-wheeler and informal loans quote a flat rate, so ask for the reducing-balance rate or the APR in the Key Fact Statement. The flat-rate interest is simple interest; see the Simple Interest Calculator.
How to calculate EMI in Excel
In Excel or Google Sheets, use the PMT function: =PMT(annual rate/12, months, -loan amount).
For the ₹10 lakh car loan at 9% for 5 years, enter =PMT(9%/12, 60, -1000000), which returns ₹20,758. The minus sign before the loan amount makes the result positive. To split one EMI into interest and principal, use =IPMT and =PPMT with the same inputs plus the month number.
Repo rate and EMI
Most home loans in India are linked to the RBI repo rate, so a repo change moves your rate and, eventually, your EMI. The RBI raised the repo rate by 0.25 percentage points to 5.50% on 7 October 2026.
On a ₹50 lakh, 20-year loan, a rise from 8% to 8.25% means:
- EMI rises by ₹781 a month, from ₹41,822 to ₹42,603, or
- Tenure rises by about 12 months if the EMI stays the same
When your rate is reset, RBI rules require the lender to let you choose between a higher EMI, a longer tenure or both, and to offer a switch to a fixed rate. Choosing the higher EMI costs less in total.
Can I change my EMI date?
Yes, most banks and NBFCs let you change your EMI date on request, usually once or twice over the loan. You may pay interest for the extra days between the old and new dates (broken-period interest), and the new date applies from the next cycle. Ask your lender through its app, website or branch.
