EMI Calculator

EMI (Equated Monthly Installment) is a fixed payment made monthly to repay a loan. Each EMI contains two parts: principal repayment and interest charge. The proportion changes over time - early EMIs have higher interest portion (70-80%), while later EMIs have higher principal. This calculator shows the exact split for every period of your loan tenure using the reducing balance method.

Interest is calculated on outstanding balance using reducing balance method. As you pay EMIs, principal balance decreases. Lower balance means lower interest. First month interest on 100,000 at 9% is 750, but when balance reduces to 50,000, monthly interest drops to 375. The principal portion increases to keep EMI constant. This is why early prepayments save more interest.

Three strategies work globally: 1) Make lump-sum prepayments when you have surplus - prepaying early saves more interest. 2) Choose shorter tenure if EMI is affordable - this dramatically reduces interest. 3) Refinance to lower rate when available. Increasing EMI by just 10% can reduce both tenure and total interest significantly. Use this calculator to compare scenarios.

Financial experts worldwide recommend keeping total EMI obligations below 40% of net monthly income, with 30-35% being more comfortable. Factor in job stability, emergency fund needs (3-6 months expenses minimum), and other financial goals before committing. Lenders may approve higher EMI, but that doesn't mean it's wise. Leave room for unexpected expenses and savings.