How to Calculate Loan EMI: Formula, Example & Free Calculator

An EMI (Equated Monthly Installment) is the fixed amount you pay your lender every month until a loan is fully repaid. Each EMI covers part interest and part principal. Here's exactly how it's calculated.

The EMI formula

EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)

• P — the loan principal (amount borrowed)
• r — the monthly interest rate (annual rate ÷ 12 ÷ 100)
• n — the number of monthly installments (years × 12)

A worked example

Say you borrow ₹5,00,000 at 9% per year for 5 years. Then r = 9 ÷ 12 ÷ 100 = 0.0075 and n = 60. Plugging into the formula gives an EMI of about ₹10,379/month, a total interest of roughly ₹1,22,741, and a total repayment near ₹6,22,741.

Try it with your own numbers

Instead of doing the maths by hand, use our free Loan EMI Calculator — enter your amount, rate and tenure to see your monthly EMI, total interest and total payable instantly.

Tips to lower your EMI

• Longer tenure reduces the monthly EMI but increases total interest.
• A bigger down payment lowers the principal, so every EMI is smaller.
• A lower interest rate (via a better credit score or lender) has the biggest impact.

Planning a purchase? You may also like our Simple Interest Calculator and Percentage Calculator.