What is EMI (Equated Monthly Installment)?

EMI, or Equated Monthly Instalment, is the fixed monthly payment you make to a lender to repay a loan or debt—such as a home loan, car loan, personal loan, etc. It’s a widely used repayment method because it allows you to afford big-ticket purchases by breaking the cost into manageable monthly payments. For instance, if you want to buy a new car but don’t have enough funds upfront, you can take a car loan and repay it through EMIs. Typically, you’ll need to make a down payment—a lump sum paid from your own pocket at the beginning—while the remaining amount is covered by the loan and paid off in instalments.

How Do EMIs Work?

When you take a loan, the lender calculates the total interest for the entire loan tenure. This amount—along with the principal—is then divided into fixed monthly instalments (EMIs), which you must pay on a predetermined date each month. Each EMI includes both the interest and a portion of the principal. These payments remain consistent throughout the loan term.

Once you’ve paid the final EMI, your loan is considered closed. At this point, you can request a No Objection Certificate (NOC) from the lender, confirming that the loan has been fully repaid.

How is EMI Calculated?

The EMI is calculated using this standard formula:

EMI Formula:

Where:

• EMI (E) = Monthly installment
• P = Loan amount (Principal)
• r = Monthly interest rate = (Annual Rate ÷ 12 ÷ 100)
• n = Loan tenure (in months)

Example EMI Calculation

Let’s say you take a loan of ₹5,00,000 at an annual interest rate of 9% for a period of 5 years (60 months).

Step-by-Step Calculation:

• Loan Amount (P) = ₹5,00,000
• Annual Interest Rate = 9%
• Monthly Interest Rate (r) = 9 / 12 / 100 = 0.0075
• Loan Tenure (n) = 60 months

Using the EMI formula: EMI=₹5,00,000×0.0075×(1+0.0075)60÷[(1+0.0075)60−1]

EMI = ₹5,00,000 \times 0.0075 \times (1 + 0.0075)^{60} \div \left[(1 + 0.0075)^{60} – 1\right]

EMI=₹5,00,000×0.0075×(1+0.0075)60÷[(1+0.0075)60−1]

EMI≈₹10,377EMI ≈ ₹10,377EMI≈₹10,377

Loan Summary:

• Monthly EMI = ₹10,377
• Total Payment = ₹10,377 × 60 = ₹6,22,620
• Total Interest Payable = ₹6,22,620 – ₹5,00,000 = ₹1,22,620

Why Use Our EMI Calculator?

Manually calculating EMIs or using spreadsheets can be time-consuming and error-prone. Our online EMI Calculator simplifies the process:

• ✅ Instantly calculates accurate EMIs
• ✅ Shows detailed payment schedule and interest/principal breakdown
• ✅ Allows easy comparison between different loan scenarios
• ✅ Works for home loans, car loans, personal loans, education loans, and more
• ✅ Includes visual charts for better understanding

Plan smarter, borrow wisely – use our free EMI Calculator to make informed financial decisions in seconds!

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