Every bank uses the same formula to calculate your EMI. Understanding it helps you negotiate better.

The EMI Formula

EMI = P × r × (1+r)^n
      ─────────────────
         (1+r)^n − 1

Where:

• P = Principal loan amount (₹)
• r = Monthly interest rate = Annual rate / 12 / 100
• n = Total number of monthly instalments = Years × 12

Step-by-Step Example

Loan: ₹50,00,000 at 8.5% p.a. for 20 years

Step 1: Monthly rate r = 8.5 / 12 / 100 = 0.007083

Step 2: Total months n = 20 × 12 = 240

Step 3: (1+r)^n = (1.007083)^240 = 5.3067

Step 4: EMI = 50,00,000 × 0.007083 × 5.3067 / (5.3067 − 1) EMI = 50,00,000 × 0.037587 / 4.3067 EMI = ₹43,391

What Makes EMI Higher or Lower?

Total Interest Calculation

For the above example:

• Total Payable = ₹43,391 × 240 = ₹1,04,13,840
• Total Interest = ₹1,04,13,840 − ₹50,00,000 = ₹54,13,840

You pay more in interest than the original loan amount! This is why prepayments make such a big difference.

---

Skip the math — use our EMI Calculator and get instant results with the full amortization schedule.