EMI Calculator

EMI (Equated Monthly Installment) is a fixed payment made monthly to repay a loan. The formula is: EMI = P × r × (1+r)^n / ((1+r)^n-1), where P is principal, r is monthly interest rate, and n is number of payments. For a ₹10 lakh loan at 10% for 5 years: EMI ≈ ₹21,247.

Longer tenure means lower EMI but more total interest. For a ₹10 lakh loan at 10%: 3 years = ₹32,267 EMI (₹1.62 lakh interest). 5 years = ₹21,247 EMI (₹2.75 lakh interest). 7 years = ₹16,601 EMI (₹3.94 lakh interest). Choose the shortest tenure you can afford.

Prepayments reduce principal, lowering total interest. You can either reduce EMI amount or shorten tenure. Most lenders allow prepayments after 6-12 months. Some charge 2-4% prepayment penalty on fixed-rate loans. Floating-rate loans often have no prepayment charges. Even small annual prepayments significantly reduce total cost.

Flat rate calculates interest on the original principal throughout. Reducing balance calculates on remaining principal. A 10% flat rate equals roughly 18-20% reducing balance rate. Banks advertise flat rates because they look lower, but reducing balance is more favorable. Always compare the effective annual rate.

Lenders typically allow EMIs up to 40-50% of net monthly income. However, experts recommend keeping total EMIs (including existing loans) below 30-35% for financial comfort. On ₹1 lakh monthly income, aim for EMIs under ₹30,000-35,000 to leave room for savings and emergencies.