How to Calculate EMI: Formula, Example & Free Calculator

EMI (Equated Monthly Installment) is the fixed amount you pay every month towards a loan.

What is EMI?

EMI stands for Equated Monthly Installment — a fixed monthly payment that covers both principal and interest on a loan until it is fully repaid.

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), and N = number of monthly installments.

Worked example

For a loan of ₹5,00,000 at 10% annual interest for 5 years (60 months): monthly rate R = 0.00833, N = 60. The EMI works out to about ₹10,624 per month.

Tips to reduce your EMI

Choose a longer tenure to lower monthly EMI (though total interest rises), make a larger down payment, or prepay when possible to cut interest.