Loan EMI Calculator
Monthly instalment, total interest and a full amortization schedule for any loan.
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Your details
Reducing balance is what banks use for mortgages and most personal loans.
The monthly view shows every instalment and how it splits between interest and principal.
Result
- Monthly instalment (EMI)
- $2,169.56
- Total interest
- $270,693.94
- Total amount payable
- $520,693.94
- Principal
- $250,000.00
- Tenure
- 20 yr
51.99% of everything you pay
Formula — written step by step
100,000 at 9% over 10 years…
EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
r = 9% ÷ 12 ÷ 100 = 0.0075
n = 10 × 12 = 120
(1.0075)¹²⁰ = 2.451357
EMI = 100,000 × 0.0075 × 2.451357 ÷ 1.451357
EMI = 1,266.76 per month
P is the amount borrowed, r the monthly rate — the annual rate divided by twelve and then by a hundred — and n the number of instalments. Over 120 months that repays 152,010.93, of which 52,010.93 is interest.
A worked example
A 10-year loan of 100,000 at 9%
- Loan amount
- 100,000
- Annual rate
- 9%
- Term
- 10 years
- r = 0.09 ÷ 12 = 0.0075
- n = 120 months
- EMI = P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1)
- EMI = 750 × 2.451357 ÷ 1.451357
EMI = 1,266.76 per month
Total repaid is 152,010.93 — the interest alone is over half the sum borrowed. Shortening the term raises the instalment but cuts that interest sharply, which the schedule below the calculator shows month by month.
How to use this calculator
- Enter the amount you are borrowing, the annual interest rate, and the term in years.
- Leave the interest method on reducing balance unless your lender has quoted a flat rate — the two produce very different totals from the same headline percentage.
- Read the EMI for the monthly commitment, and the total interest for what the loan actually costs.
- Open the schedule to see how each instalment splits between interest and principal, and when the crossover happens.
How the EMI formula works
An EMI (equated monthly instalment) is a fixed payment that covers both interest and principal. It is calculated as P × r × (1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (the annual rate divided by twelve, then by a hundred), and n is the number of months.
Because the payment is fixed but the outstanding balance falls every month, the split inside each instalment shifts. Early payments are mostly interest; later ones are mostly principal. The yearly table above shows exactly where that crossover happens for your loan.
Reducing balance vs flat rate
Reducing-balance interest is charged only on what you still owe, so the interest component shrinks as the loan matures. This is the standard for mortgages, car loans and most personal loans.
A flat rate charges interest on the original amount for the whole term. A "6% flat" loan is far more expensive than a "6% reducing" one — often close to double the effective rate. If a lender quotes a flat rate, switch the method above to compare the two honestly before signing.
What actually reduces your total interest
Total interest is driven far more by tenure than by small rate differences. Shortening a twenty-year loan to fifteen typically saves more than negotiating half a percentage point off the rate, because interest accrues on a large balance for five fewer years.
Prepayments have outsized effect early in the term, when the balance — and therefore the monthly interest charge — is at its highest. A lump sum in year two saves considerably more than the same sum in year fifteen.
Formula & methodology
What this calculator assumes
- Excludes processing fees, insurance, stamp duty, prepayment penalties and any other lender charge — these vary by lender and jurisdiction and can materially change the true cost.
- Assumes a fixed interest rate for the whole term and payments made exactly on schedule.
- The final instalment absorbs rounding so the balance closes at exactly zero.
Sources
- Brealey, Myers & Allen, Principles of Corporate Finance, 13th edition, McGraw-Hill, 2019 — valuing an annuity, from which the amortization formula follows.
Reducing balance against flat rate
| Reducing balance | Flat rate | |
|---|---|---|
| Interest charged on | The outstanding balance, recalculated monthly | The original principal, for the whole term |
| Same quoted rate costs | Less | Roughly twice as much over a long term |
| Typically used for | Home loans, most bank personal loans | Some vehicle and consumer finance |
| Comparable figure | The quoted rate is the true rate | Ask for the equivalent reducing-balance rate |
A 9% flat rate is not comparable to a 9% reducing-balance rate. Because a flat rate keeps charging interest on money you have already repaid, its true cost is close to double — always compare on the same basis.
Frequently asked questions
Does a longer tenure lower my EMI?
Yes, but it raises total interest. Stretching a loan from 15 to 20 years cuts the monthly payment noticeably while adding years of interest charges on a slowly shrinking balance.
Is the interest rate here monthly or annual?
Annual. The calculator divides it by twelve internally to get the monthly rate used in the formula.
Does this include processing fees or insurance?
No. It models the loan itself. Lenders often add one-off processing fees and mandatory insurance, which raise the effective cost above the headline rate.
Yearly amortization
| Year | Principal paid | Interest paid | Balance |
|---|---|---|---|
| 1 | $4,975.57 | $21,059.12 | $245,024.43 |
| 2 | $5,415.37 | $20,619.33 | $239,609.06 |
| 3 | $5,894.04 | $20,140.66 | $233,715.02 |
| 4 | $6,415.02 | $19,619.68 | $227,300.00 |
| 5 | $6,982.05 | $19,052.65 | $220,317.96 |
| 6 | $7,599.20 | $18,435.50 | $212,718.76 |
| 7 | $8,270.90 | $17,763.80 | $204,447.87 |
| 8 | $9,001.97 | $17,032.73 | $195,445.90 |
| 9 | $9,797.66 | $16,237.04 | $185,648.24 |
| 10 | $10,663.68 | $15,371.01 | $174,984.56 |