How to Calculate EMI Loan
What is EMI Loan?
EMI (Equated Monthly Installment) is the fixed monthly payment for a loan, comprising both principal and interest. Widely used in India and South Asia for home loans, car loans, and personal loans. The formula is identical to the standard loan payment calculation.
Step-by-Step Guide
- 1EMI = P × r × (1+r)^n / ((1+r)^n − 1)
- 2P = Principal, r = monthly interest rate (annual rate/12), n = loan tenure in months
- 3Total payment = EMI × n; Total interest = Total payment − Principal
- 4Partial prepayment reduces either the EMI or the tenure
Worked Examples
Input
₹50 lakh loan, 8.5% p.a., 20 years
Result
₹43,391 EMI
Total interest: ₹54.1 lakh
Input
₹10 lakh personal loan, 14%, 3 years
Result
₹34,178 EMI
Total interest: ₹2.3 lakh
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