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Last updated 3 September 2026
How EMI is calculated
Every fixed-rate instalment loan — mortgages, car loans, personal loans — uses the same underlying formula. Each monthly payment (EMI) is identical throughout the term, but the mix inside it changes: early payments are mostly interest, later payments are mostly principal, even though the total you pay each month never moves.
The formula is EMI = P × r × (1+r)n ÷ ((1+r)n − 1), where P is the amount borrowed, r is the interest rate per month (the annual rate divided by 12 and by 100), and n is the total number of monthly payments.
Reading the split
The bar above the totals shows how your total repayment divides between principal (what you borrowed) and interest (what it cost you to borrow it). A longer term lowers the monthly payment but raises the interest share, since the balance stays outstanding for longer. A shorter term does the opposite — higher monthly payment, less interest overall.
Comparing loans properly
The advertised interest rate is rarely the whole cost. Arrangement fees, processing charges, mandatory insurance and early-repayment penalties all change what a loan actually costs, and two loans at the same nominal rate can differ substantially once they are included. Where it is available, the APR or effective annual rate is the figure designed for comparison, because it folds compulsory fees into a single number.
Term length is the other lever, and it works in the opposite direction to intuition. Extending a loan lowers the monthly payment and raises the total interest, often dramatically — the same borrowing over seven years instead of five can cost a third more in total while feeling more affordable each month. The monthly figure is what you have to live with; the total is what it costs.
Assumptions and limitations
What the maths does. It uses the standard amortising-loan formula: a fixed interest rate, equal monthly instalments, and every payment made in full and on time for the whole term.
What is not included. Processing, arrangement, documentation and insurance fees; late-payment charges; early-settlement or prepayment penalties; and any rate change on a variable-rate loan. Lenders quote an APR that folds compulsory fees into the headline rate, so a lender’s figure and this one will often differ.
How lenders round differs. Day-count conventions, rounding rules and the timing of the first instalment vary between institutions, so the real schedule can be a little different from this one even at the same nominal rate.
Assumptions that apply to every finance calculator here
Currency is a display choice only. Changing the currency symbol relabels the output; it does not convert anything and no exchange rate is used anywhere in this tool.
Tax and lending rules vary by country. Nothing here is adjusted for the rules where you live — income tax, capital gains tax, stamp duty, lending caps, affordability tests and consumer-credit regulation all differ, and several of them can change the real answer materially.
Rates and returns are not guaranteed. Any rate you enter is treated as fixed for the whole period. Real interest rates move, real investment returns vary year to year and can be negative, and past performance does not predict future results.
This is an estimate, not advice. The result is arithmetic on the numbers you typed. It is not an offer, a quote, an approval, an investment recommendation or financial advice. Before committing to anything, get figures from the actual lender, provider or a qualified adviser in your country.
Common questions
What is EMI?
EMI stands for Equated Monthly Instalment — a fixed monthly payment that pays off a loan over its term. Each payment covers that month's interest plus a portion of the principal, and the split shifts toward more principal as the loan progresses.
How is EMI calculated?
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments. This is the standard amortising-loan formula used by banks.
Why is the total repayment more than the loan amount?
Because interest accrues on the outstanding balance throughout the term. The longer the term or the higher the rate, the larger the interest portion, which is why the total interest figure can sometimes exceed the loan amount itself on long low-payment terms.
Is this the exact amount my bank will charge?
It is a close estimate using the standard formula, but real loans can include fees, insurance, rounding rules or a different compounding method. Treat this as a planning figure and confirm the exact terms with your lender.