EMI Calculator

EMI uses the reducing balance formula: EMI = P × r × (1+r)^n / [(1+r)^n − 1], where P is the loan amount, r is the monthly interest rate, and n is the number of months. Each installment splits into interest (higher early on) and principal (higher toward the end).

Reducing balance charges interest only on the outstanding principal, so your effective interest drops every month. Flat rate charges interest on the full original loan amount for the entire tenure — this looks similar on paper but costs significantly more. Nearly all Indian home and personal loans use reducing balance; some vehicle and consumer loans still quote flat rates.

Most Indian lenders let you choose. Reducing tenure (keeping EMI fixed) saves more total interest since you're compressing the high-interest early years. Reducing EMI (keeping tenure fixed) improves monthly cash flow instead. For pure interest savings, tenure reduction wins in almost every case.

Most lenders cap total EMI obligations (including existing loans) at 40–50% of net monthly income (FOIR). For personal financial planning, keeping it under 35–40% leaves enough room for SIPs, emergencies, and lifestyle costs without over-leveraging.

With a floating rate loan, your EMI or tenure adjusts when the lender's benchmark rate (usually linked to the RBI repo rate) changes. Most banks keep EMI fixed and extend tenure when rates rise, which can silently add years to your loan — worth checking your loan statement periodically.