How to Calculate EMI: Formula, Example & Tips

By calculatorfc.online Editorial Team · Updated 2026-05-02

What is EMI?

EMI (Equated Monthly Instalment) is the fixed amount you pay your lender every month until a loan is fully repaid. Each EMI covers part interest and part principal.

The EMI formula

EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the principal loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly instalments.

Worked example

For a loan of ₹5,00,000 at 10% annual interest for 5 years (60 months): r = 0.00833, n = 60. Plugging into the formula gives an EMI of roughly ₹10,624 per month.

How to reduce your EMI

You can lower your EMI by making a larger down payment, choosing a longer tenure (which increases total interest), negotiating a lower rate, or making part-prepayments when possible.

Why use an EMI calculator

Doing this by hand is error-prone. An EMI calculator instantly shows your monthly payment, total interest and total cost so you can compare loan options before you commit.