How to Calculate Your Loan EMI (With a Simple Example)
Understand exactly how your monthly loan payment is worked out, what drives the total interest, and how to estimate it in seconds.
EMI stands for Equated Monthly Instalment — the fixed amount you pay your lender every month until a loan is fully repaid. Knowing how it's calculated helps you compare offers and avoid surprises.
The formula
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly payments.
A worked example
Borrow 20,000 at 7.5% annual interest over 5 years (60 months). The monthly rate is 0.625%. Plugging the numbers in gives an EMI of about 400.76 per month — a total of roughly 24,046, of which about 4,046 is interest.
What lowers your total interest
- A shorter term — you pay more each month but far less interest overall.
- A lower rate — even 1% makes a big difference on long loans.
- A bigger down payment — less borrowed means less interest.
Try it with your own numbers
Our loan calculator does the maths instantly and shows your monthly payment, total interest and total cost — in any currency.
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