EMI stands for Equated Monthly Installment. It’s a fixed monthly payment that repays a loan over time, covering both principal and interest.
EMI depends on three inputs
- Principal: the loan amount
- Interest rate: annual interest (converted to monthly)
- Tenure: number of months (or years converted to months)
The EMI formula
Formula
EMI = P × r × (1+r)^n / ((1+r)^n − 1)
Where P = principal, r = monthly rate, and n = number of months.
How rate and tenure change EMI
- Higher interest rate increases EMI and total interest.
- Longer tenure reduces EMI but increases total interest paid.
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Use our EMI Calculator to see payment, total interest, and a month-by-month preview: