Finance
How to Calculate EMI
5 min read
An Equated Monthly Installment (EMI) is the fixed amount you pay each month to repay a loan over a specified period. It includes both the principal repayment and the interest charge.
The EMI Formula
EMI = [P × R × (1+R)N] / [(1+R)N − 1]
Where:
- P = Principal loan amount
- R = Monthly interest rate (Annual rate ÷ 12 ÷ 100)
- N = Loan tenure in months
Worked Example
Loan: ₹5,00,000 | Rate: 10% per annum | Tenure: 5 years (60 months)
- R = 10 ÷ 12 ÷ 100 = 0.00833
- EMI = 5,00,000 × 0.00833 × (1.00833)^60 / [(1.00833)^60 − 1]
- EMI ≈ ₹10,624
Factors That Affect EMI
- Principal: Higher principal = higher EMI
- Interest Rate: Higher rate = higher EMI
- Tenure: Longer tenure = lower EMI but more total interest
Use our free EMI Calculator to instantly compute your monthly installment.