How to Calculate EMI – EMI Formula Explained (Equated Monthly Installment)
Wondering how to calculate EMI for a loan? EMI (equated monthly installment) is the fixed amount you pay each month toward principal and interest. Banks and lenders use the same formula everywhere: EMI = P × [r(1+r)^n] / [(1+r)^n − 1]. This article explains the EMI formula, what each variable means, and how to use our free EMI calculator for home loans, personal loans, or car loans.
Quick Answer
| Label | Value |
|---|---|
| Loan amount | $20,000 |
| Annual rate | 10% |
| Tenure | 5 years |
| EMI (monthly) | $424.94 |
How It Works
EMI is the fixed monthly payment that pays off a loan over its term. The formula is EMI = P × [r(1+r)^n] / [(1+r)^n − 1], where P is the principal (loan amount), r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly installments (tenure in years × 12). Early in the loan, most of each EMI goes to interest; over time, more goes to principal. Use our EMI Calculator to try different amounts, rates, and tenures—for example, see how a longer tenure lowers your EMI but increases total interest, or how a lower rate reduces both.
Additional Notes
For amortization schedules (month-by-month breakdown of principal vs interest), use our Mortgage Calculator. For home loans specifically, the same EMI formula applies.
Use Our Calculator
Try our EMI Calculator for your own numbers: /calculators/emi-calculator
Related Calculators
EMI (equated monthly installment) is the fixed monthly payment you make toward a loan. It includes both principal and interest; the split between them changes each month.
Use EMI = P × [r(1+r)^n] / [(1+r)^n − 1]. Convert annual rate to monthly (÷ 12 ÷ 100) and tenure to months (years × 12). Our EMI Calculator does this for you.
Yes. A longer tenure spreads the loan over more months, so each EMI is lower. But you pay more total interest over the life of the loan.