EMI & Loan Calculator

EMI (equated monthly instalment) is the fixed amount you pay every month so that the loan and its interest are fully repaid by the end of the term. It is calculated as EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (the yearly rate ÷ 12 ÷ 100) and n is the number of monthly payments.

Example: a loan of $200,000 at 6.5% a year for 30 years has r = 0.065 ÷ 12 = 0.0054167 and n = 360, which gives an EMI of $1,264.14. Over 30 years you pay about $455,086 in total, of which about $255,086 is interest.

Monthly payment and total interest for a 200,000 loan (any currency). A longer term lowers the monthly payment but greatly increases the total interest.

Each month, interest is charged on the balance that is still outstanding. At the start the balance is highest, so most of your payment covers interest and only a little reduces the loan. As the balance falls, the interest part shrinks and the principal part grows — which is why the columns in the chart change colour over the years. This is also why extra payments early in the loan save the most interest.

Yes. Every extra amount goes straight to reducing the principal, so all future interest is calculated on a smaller balance. On the $200,000 loan at 6.5% for 30 years, paying an extra $200 a month pays the loan off years earlier and saves tens of thousands in interest — try it in the calculator. Check first whether your lender charges a prepayment fee and whether extra payments shorten the term or lower the EMI.

In India and many other countries the monthly loan payment is called the EMI. In the US, UK, Canada and Australia people usually say monthly mortgage payment or loan repayment. They are calculated the same way. A mortgage payment quoted by a lender may also include property tax, home insurance or mortgage insurance, which this calculator does not add.

The same formula can be solved for any of its parts. Choose Loan amount to see how much you can borrow for a payment you can afford: 1,500 a month for 30 years at 6.5% supports a loan of about 237,316. Choose Loan term to see how long a payment takes to clear a debt: paying 1,500 a month on 200,000 at 6.5% takes 19 years 10 months instead of 30 years. Choose Interest rate to find the rate hidden in an offer that only tells you the payment, for example a car dealer's monthly price; the result is the nominal yearly rate before fees. If a payment doesn't even cover the interest, the calculator tells you the loan would never be repaid.

Paying every two weeks (26 payments a year) or every week (52 a year) over the same term saves only a little interest, because each payment reduces the balance slightly sooner: on 200,000 at 6.5% over 30 years, bi-weekly payments of 583.17 cost about 207 less interest than monthly payments of 1,264.14. The big savings people talk about come from accelerated bi-weekly payments: paying half the monthly amount, 632.07, every two weeks adds up to 13 monthly payments a year and clears the loan in about 24 years 2 months. To check this, choose Loan term, set Payments to Bi-weekly and enter half your monthly payment.