{"id":2368,"date":"2026-10-13T21:13:00","date_gmt":"2026-10-13T15:43:00","guid":{"rendered":"https:\/\/www.tiwaripedia.com\/index.php\/2026\/10\/13\/how-emi-is-calculated\/"},"modified":"2026-10-13T21:18:16","modified_gmt":"2026-10-13T15:48:16","slug":"how-emi-is-calculated","status":"publish","type":"post","link":"https:\/\/www.tiwaripedia.com\/index.php\/2026\/10\/13\/how-emi-is-calculated\/","title":{"rendered":"How EMI Is Calculated: Formula, Examples and How to Reduce Your Loan EMI"},"content":{"rendered":"<p><em>Last updated: October 2026 \u00b7 3 min read<\/em><\/p>\n<p>An <b>EMI (Equated Monthly Instalment)<\/b> is the fixed amount you pay every month to repay a loan. Each EMI has two parts: interest and principal. Knowing how it is calculated helps you choose the right tenure and save money.<\/p>\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"1200\" height=\"675\" src=\"https:\/\/www.tiwaripedia.com\/wp-content\/uploads\/2026\/10\/how-emi-is-calculated.png\" alt=\"Infographic: How EMI Is Calculated: Formula, Examples and How to Reduce Your Loan EMI\" class=\"wp-image-2367\" srcset=\"https:\/\/www.tiwaripedia.com\/wp-content\/uploads\/2026\/10\/how-emi-is-calculated.png 1200w, https:\/\/www.tiwaripedia.com\/wp-content\/uploads\/2026\/10\/how-emi-is-calculated-300x169.png 300w, https:\/\/www.tiwaripedia.com\/wp-content\/uploads\/2026\/10\/how-emi-is-calculated-1024x576.png 1024w, https:\/\/www.tiwaripedia.com\/wp-content\/uploads\/2026\/10\/how-emi-is-calculated-768x432.png 768w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><figcaption>How EMI Is Calculated: Formula, Examples and How to Reduce Your Loan EMI \u2013 infographic by Tiwaripedia<\/figcaption><\/figure>\n<h2>The EMI formula<\/h2>\n<b>EMI = P \u00d7 r \u00d7 (1 + r)<sup>n<\/sup> \u00f7 [(1 + r)<sup>n<\/sup> \u2212 1]<\/b><br>where P = loan amount, r = monthly interest rate (annual rate \u00f7 12 \u00f7 100) and n = number of monthly instalments.\n<h2>Worked example<\/h2>\n<p>Loan of \u20b910 lakh at 9% a year for 10 years:<\/p><ul><li>r = 9 \u00f7 12 \u00f7 100 = 0.0075<\/li><li>n = 120 months<\/li><li>EMI \u2248 <b>\u20b912,668<\/b><\/li><li>Total paid \u2248 \u20b915.2 lakh, so total interest \u2248 \u20b95.2 lakh<\/li><\/ul>\n<h2>How rate and tenure change your EMI (\u20b910 lakh loan)<\/h2>\n<figure class=\"wp-block-table\"><table><thead><tr><th>Rate<\/th><th>10 years EMI<\/th><th>Total interest<\/th><th>20 years EMI<\/th><th>Total interest<\/th><\/tr><\/thead><tbody><tr><td>8%<\/td><td>\u20b912,133<\/td><td>\u20b94.56 lakh<\/td><td>\u20b98,364<\/td><td>\u20b910.07 lakh<\/td><\/tr><tr><td>9%<\/td><td>\u20b912,668<\/td><td>\u20b95.20 lakh<\/td><td>\u20b98,997<\/td><td>\u20b911.59 lakh<\/td><\/tr><tr><td>10%<\/td><td>\u20b913,215<\/td><td>\u20b95.86 lakh<\/td><td>\u20b99,650<\/td><td>\u20b913.16 lakh<\/td><\/tr><\/tbody><\/table><\/figure><p>A longer tenure lowers your EMI but more than doubles the total interest.<\/p>\n<h2>Amortisation: why early EMIs are mostly interest<\/h2>\n<p>In the first years, interest is calculated on a large outstanding balance, so most of the EMI goes towards interest. As the balance falls, more of each EMI goes towards principal. Your lender&#8217;s amortisation schedule shows this month by month.<\/p>\n<h2>Ways to reduce EMI or total interest<\/h2>\n<ul><li>Improve your credit score before applying to get a lower rate.<\/li><li>Make a bigger down payment.<\/li><li>Prepay part of the loan whenever possible.<\/li><li>Choose a shorter tenure if you can afford the EMI.<\/li><li>Consider a balance transfer to a lender with a lower rate.<\/li><li>Increase your EMI by 5-10% each year as your income grows.<\/li><\/ul>\n<h2>Frequently asked questions<\/h2>\n<h3>Is EMI calculated on reducing balance?<\/h3>\n<p>Yes, for most home, car and personal loans from banks. Some lenders quote flat rates, which are more expensive than they look.<\/p>\n<h3>Does a repo rate hike increase my EMI?<\/h3>\n<p>For floating-rate loans linked to the repo rate, the rate rises; lenders usually extend tenure or increase EMI.<\/p>\n<h3>Can I calculate EMI in Excel?<\/h3>\n<p>Yes: use =PMT(rate\/12, months, -loan). For the example above: =PMT(9%\/12,120,-1000000).<\/p>\n<h2>Keep exploring<\/h2>\n<ul><li><a href=\"\/index.php\/2026\/10\/13\/home-loan-guide-india\/\">Home loan guide<\/a><\/li><li><a href=\"\/index.php\/2026\/10\/13\/power-of-compounding-explained\/\">Power of compounding<\/a><\/li><li><a href=\"\/index.php\/2026\/10\/13\/personal-loan-vs-gold-loan-vs-credit-card\/\">Personal loan vs gold loan<\/a><\/li><li><a href=\"\/index.php\/category\/loans-credit\/\">More Loans &#038; Credit articles on Tiwaripedia<\/a><\/li><\/ul>\n<p><em>This article is for general information, not financial, tax or legal advice. Rates, limits and rules change; always confirm on the official website or with a qualified advisor before you act. Spotted something that needs updating? <a href=\"\/index.php\/contact-us\/\">Let us know<\/a>.<\/em><\/p>","protected":false},"excerpt":{"rendered":"<p>How loan EMI is calculated: the EMI formula with a step-by-step example, amortisation explained, how rate and tenure change EMI and total interest, and ways to reduce it.<\/p>\n","protected":false},"author":1,"featured_media":2367,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"googlesitekit_rrm_CAow_YXIDA:productID":""},"categories":[332],"tags":[],"_links":{"self":[{"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/posts\/2368"}],"collection":[{"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/comments?post=2368"}],"version-history":[{"count":1,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/posts\/2368\/revisions"}],"predecessor-version":[{"id":2440,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/posts\/2368\/revisions\/2440"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/media\/2367"}],"wp:attachment":[{"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/media?parent=2368"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/categories?post=2368"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tiwaripedia.com\/index.php\/wp-json\/wp\/v2\/tags?post=2368"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}