EMI Calculator

How it is calculated

EMI

• EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
• P = principal, r = monthly rate = annual rate ÷ 12 ÷ 100, n = tenure in months
• At 0% interest the EMI is simply P ÷ n

Loan amount you can afford (the same formula, rearranged)

• P = EMI × ((1 + r)^n − 1) ÷ (r × (1 + r)^n)
• This is the eligibility a lender computes from the EMI you can service; the amount they actually sanction also depends on income, credit history and the value of the property or asset.

Prepayment

• The lump sum is taken off the outstanding balance in the month you pay it.
• Keep the EMI the same and the loan simply ends sooner — the instalments you never pay are the saving.
• Keep the end date and the EMI is recomputed on the reduced balance for the months that remain.
• Saving = interest on the original schedule − interest actually paid.

Things to keep in mind

• Processing fees, insurance, stamp duty and GST on charges are not included.
• Floating-rate loans reset with the lender’s benchmark; the schedule assumes the rate stays constant.
• The affordability figure is an indication of what the EMI supports, not a sanction. Lenders also apply income multiples, existing obligations, credit score and a loan-to-value cap.
• Some lenders charge a prepayment penalty. RBI does not permit one on floating-rate loans to individuals, but fixed-rate loans and loans to firms may attract a charge — check your sanction letter.