Real-time EMI calculation with amortization schedule, formula explanation, and professional financial analysis
This table shows the breakdown of each EMI payment into principal and interest components over the loan tenure.
| Year | Principal Paid | Interest Paid | Remaining Balance | Cumulative Interest |
|---|
The EMI (Equated Monthly Installment) is calculated using a standard mathematical formula that takes into account the principal amount, interest rate, and loan tenure.
EMI = [P × R × (1+R)^N] / [(1+R)^N-1]
Where:
P = Principal loan amount (the initial borrowed sum)
R = Monthly interest rate (annual rate ÷ 12 ÷ 100)
N = Loan tenure in months (years × 12)
For a ₹20 lakh home loan at 7.5% annual interest for 20 years:
Step 1: P = ₹20,00,000
Step 2: R = 7.5% ÷ 12 ÷ 100 = 0.00625
Step 3: N = 20 × 12 = 240 months
Step 4: EMI = [20,00,000 × 0.00625 × (1.00625)^240] ÷ [(1.00625)^240 - 1]
Result: EMI = ₹16,107
This formula ensures that each EMI payment contributes to both principal repayment and interest payment, with the interest component being higher in the initial years and gradually decreasing over time.
With rising real estate prices in 2026, a ₹75 lakh apartment with 20% down payment results in a ₹60 lakh home loan. At 8.2% interest for 25 years, the EMI would be ₹47,892. However, by opting for a 20-year tenure instead, the EMI increases to ₹51,324 but saves approximately ₹18 lakh in total interest.
Electric vehicles priced at ₹18 lakh with ₹1.8 lakh government subsidy (10%) effectively cost ₹16.2 lakh. With 15% down payment, the loan amount becomes ₹13.77 lakh. At a special green loan rate of 7.5% for 7 years, the EMI would be ₹20,324. Fuel savings of ₹4,500/month partially offset this EMI.
A ₹45 lakh education loan for a US Master's program at 8.8% interest with a 1.5-year moratorium (course + 6 months) and 15-year repayment period results in an EMI of ₹45,217 starting after the moratorium. Many lenders allow interest-only payments during study periods.
Consolidating three high-interest loans (credit card: ₹2 lakh at 18%, personal loan: ₹3 lakh at 14%, education loan: ₹5 lakh at 12%) into a single ₹10 lakh loan at 11% for 5 years reduces the combined EMI from approximately ₹35,000 to ₹21,735, improving monthly cash flow.
This calculator uses the same standard EMI formula employed by banks and financial institutions worldwide. The results are mathematically identical to what banks calculate, with any minor differences typically arising from rounding methods or specific bank processing fees not included in the base calculation.
Partial prepayments reduce the principal amount, which decreases the total interest payable. You typically have two options: 1) Reduce EMI with the same tenure, or 2) Maintain EMI with reduced tenure. The latter saves more interest overall. Most lenders allow annual prepayments up to 25% of the outstanding balance without penalties.
Reducing balance (diminishing balance) calculates interest on the outstanding principal each month, which decreases as you repay. This is standard for most loans. Flat rates calculate interest on the original principal throughout the tenure, resulting in significantly higher effective interest costs. Always choose reducing balance loans when available.
Credit scores don't change the EMI formula but significantly impact the interest rate offered. Borrowers with scores above 750 typically qualify for rates 0.5-1.5% lower than those with average scores. A 1% difference on a ₹30 lakh, 20-year home loan changes EMI by approximately ₹1,800/month and total interest by ₹4.3 lakh.
An amortization schedule is a table showing the breakdown of each EMI into principal and interest components throughout the loan tenure. It's crucial because it reveals how much interest you're paying versus principal repayment, helps plan prepayments strategically, and shows your loan payoff progress.
Most lenders allow EMI restructuring through tenure adjustment or balance transfers. Some also offer step-up EMI (starting lower, increasing with income growth) or step-down EMI (starting higher, decreasing over time). However, these changes may involve processing fees or revised interest rates.
Financial advisors recommend keeping total EMIs below 40% of net monthly income. For example, with a ₹1 lakh monthly income, limit total EMIs to ₹40,000. This allocation ensures sufficient funds for living expenses, savings, investments, and emergency funds while maintaining healthy debt management.
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