EMI Calculator – Know Exactly What You’ll Pay Before You Sign Any Loan Paper

Before You Say Yes to Any Loan, Do This First

A bank representative calls you. Your home loan is approved. They tell you the EMI is ₹42,000 per month. You nod and sign the papers.

But did you actually understand where that ₹42,000 number came from? Did you know how much of it goes to interest versus the actual loan amount? Did you check whether a slightly longer or shorter tenure would save you lakhs?

Most Indians don’t. And that lack of understanding costs them real money – sometimes lakhs over the life of a loan.

This EMI calculator changes that. Before you sign anything, punch in the numbers and see exactly what you’re committing to – broken down, month by month, rupee by rupee.

How to Use It – Straightforward

Step 1 – Enter your loan amount. This is the total amount you’re borrowing. For a home loan, it might be ₹30 lakhs. For a car loan, maybe ₹8 lakhs. For a personal loan, whatever the bank approves.

Step 2 – Enter the annual interest rate. This is what the bank charges you for lending the money. Home loans currently run around 8-9%. Car loans are typically 9-12%. Personal loans can be anywhere from 10-24% depending on the lender and your credit score.

Step 3 – Set the loan tenure in months. How long are you taking to repay? A 20-year home loan is 240 months. A 5-year car loan is 60 months. Longer tenure = lower monthly EMI but more total interest paid.

The calculator instantly shows you your monthly EMI, total amount you’ll pay over the entire loan period, and total interest paid – along with a breakdown of how each EMI splits between principal and interest.

The Formula – And Why Your EMI Looks the Way It Does

EMI = P × r × (1 + r)^n / {(1 + r)^n – 1}

Where:

• EMI – Your monthly payment
• P – The loan amount (principal)
• r – Monthly interest rate (annual rate ÷ 12 ÷ 100)
• n – Total number of monthly payments (tenure in months)

Let’s work through a real example:

You take a home loan of ₹30,00,000 at 9% annual interest for 20 years (240 months).

r = 9 ÷ 12 ÷ 100 = 0.0075 n = 240 P = 30,00,000

EMI = 30,00,000 × 0.0075 × (1.0075)^240 / {(1.0075)^240 – 1} EMI = 30,00,000 × 0.0075 × 6.0226 / {6.0226 – 1} EMI = 30,00,000 × 0.04517 / 5.0226 EMI = 1,35,500 / 5.0226 EMI ≈ ₹26,985 per month

Over 240 months, you pay: ₹26,985 × 240 = ₹64,76,400

You borrowed ₹30 lakhs. You’re paying back ₹64.76 lakhs. That extra ₹34,76,400 is pure interest – more than the loan amount itself.

This is why understanding your EMI breakdown matters so much. More than half your payment goes to interest, especially in the early years.

The Thing Nobody Tells You About EMI: The Interest-Principal Split

Here’s what surprises most first-time borrowers: in the early months of your loan, almost all of your EMI goes to interest. The principal repayment is tiny. It’s only towards the end of the loan that a meaningful chunk starts reducing your actual debt.

Using our ₹30 lakh home loan example (9%, 20 years):

Month	EMI	Interest Component	Principal Component	Remaining Loan
1	₹26,985	₹22,500	₹4,485	₹29,95,515
12	₹26,985	₹21,865	₹5,120	₹29,42,000 (approx)
60	₹26,985	₹19,890	₹7,095	₹26,52,000 (approx)
120	₹26,985	₹16,200	₹10,785	₹21,60,000 (approx)
180	₹26,985	₹10,800	₹16,185	₹14,40,000 (approx)
240	₹26,985	₹200	₹26,785	₹0

See how it flips? In month 1, only ₹4,485 goes towards reducing your debt. By month 240, almost the entire EMI is principal. This is called an amortisation schedule, and it’s one of the most important things to understand about any loan.

How Tenure Changes Everything

This is where most Indians make their biggest loan mistake – choosing tenure based purely on what EMI they can “afford” without understanding the total cost.

Same ₹30 lakh loan at 9%:

Tenure	Monthly EMI	Total Paid	Total Interest	Interest as % of Loan
10 years	₹42,990	₹51,58,800	₹21,58,800	72%
15 years	₹30,480	₹54,86,400	₹24,86,400	83%
20 years	₹26,985	₹64,76,400	₹34,76,400	116%
25 years	₹25,220	₹75,66,000	₹45,66,000	152%
30 years	₹24,157	₹86,96,520	₹56,96,520	190%

The difference between a 10-year and a 30-year tenure on the same loan is ₹35,37,720 in interest. That’s ₹35 lakhs you’re paying extra just because you chose a longer repayment period.

Yes, a shorter tenure means a higher monthly EMI. But if you can manage it, the savings are enormous.

Real Indian Scenarios: How EMI Decisions Play Out

The Home Buyer’s Dilemma

Arjun is buying a flat for ₹60 lakhs with a ₹40 lakh home loan at 8.5%.

His bank offers him two options:

• 20 years: EMI of ₹35,550/month. Total interest: ₹45,32,000
• 30 years: EMI of ₹30,680/month. Total interest: ₹70,44,800

The 30-year option saves him ₹4,870 per month. But it costs him ₹25,12,800 more in total interest over the loan’s lifetime. That ₹4,870 monthly saving, if invested in a mutual fund at 12% for 30 years, would actually grow to approximately ₹1,76,00,000.

The cheaper-looking EMI actually destroys wealth.

The Car Loan Trap

Meera buys a car worth ₹12 lakhs. The showroom offers a 7-year loan at 11%.

Monthly EMI: ₹23,270 Total paid over 7 years: ₹19,54,680 Interest paid: ₹7,54,680

That car cost her ₹19.5 lakhs in total, not ₹12 lakhs. And cars lose value every year – by the time the loan ends, the car might be worth only ₹4-5 lakhs.

If she had saved for 2 more years and bought it with cash, she would have saved ₹7.5 lakhs in interest.

The Personal Loan Reality Check

Raj takes a ₹3 lakh personal loan at 18% for 3 years because he needs money urgently.

Monthly EMI: ₹10,830 Total paid: ₹3,89,880 Interest: ₹89,880

That’s a 30% premium on top of the borrowed amount, paid over just 3 years. Personal loans are expensive. Only take them if absolutely necessary – and try to repay early if possible.

How to Actually Save Money on Your Loan

1. Choose the Shortest Tenure You Can Afford

This is the single biggest lever you have. Even moving from 20 years to 15 years on a home loan saves lakhs in interest. Calculate what the higher EMI would be and check if your budget can handle it.

2. Make Prepayments Whenever Possible

Got a bonus? Received a gift? Sold something? Put that extra money towards your loan principal. Every rupee of prepayment reduces the interest you’ll pay over the remaining tenure. Most banks allow prepayment with little or no penalty on home loans.

3. Compare Before You Commit

A 0.5% difference in interest rate on a ₹30 lakh home loan over 20 years is approximately ₹3 lakhs in interest. Shop around. Check 3-4 banks before settling. Online loan aggregators can help you compare quickly.

4. Negotiate the Rate

If you have a good credit score (750+), you have bargaining power. Banks would rather give you a slightly lower rate than lose you as a customer. Ask for it.

5. Consider Balance Transfer Mid-Loan

If rates drop significantly after you’ve taken a loan, you can transfer your outstanding balance to another bank at a lower rate. The process has some paperwork, but the savings can be substantial.

The Tax Angle on Home Loans

Home loans specifically come with tax benefits under Indian tax law:

Principal Repayment – The principal component of your EMI qualifies for a deduction of up to ₹1.5 lakhs per year under Section 80C. This reduces your taxable income.

Interest Payment – The interest component qualifies for a deduction of up to ₹2 lakhs per year under Section 24(b). On a ₹30 lakh home loan, your annual interest in the early years will be around ₹2.5 lakhs – so you can claim the full ₹2 lakh limit.

Combined Benefit: If you’re in the 30% tax bracket, these deductions can save you ₹1,05,000 or more per year in taxes. This effectively reduces the real cost of your home loan significantly.

Note: Car loans and personal loans do NOT get these tax benefits. Only home loans qualify.

Mistakes Indians Make With EMI Calculations

Believing the Bank’s “You Can Afford This” Statement

Banks calculate affordability based on your gross income. They don’t factor in your actual monthly expenses, other financial goals, or the fact that life throws unexpected costs at you regularly. Always run the numbers yourself.

Not Accounting for Insurance

If you have a home loan, you should have home insurance AND life insurance. If you have a car loan, you need comprehensive car insurance. These add to your monthly outflow and should be factored into your EMI affordability check.

Ignoring the Processing Fee and Other Charges

The actual cost of a loan isn’t just the interest rate. Banks charge processing fees (0.5-1% of loan amount), documentation charges, and sometimes valuation fees. Factor all of this into your total cost calculation.

Taking Multiple Loans Simultaneously

Having a home loan AND a car loan AND a personal loan all at once puts enormous strain on your monthly cash flow. Each loan’s EMI reduces the money available for savings and investments. Be strategic about when you take loans.

Quick Tips Before You Apply for Any Loan

Calculate your EMI first, then decide if you can afford it. Don’t let the bank decide this for you. Use this calculator, factor in all your other expenses, and make sure you still have at least 20-30% of your income going towards savings after the EMI.

Always check your credit score before applying. A higher score (750+) gives you better rates. If your score is low, spend 6-12 months improving it before applying – the rate difference can save you lakhs.

Read the loan agreement carefully. Especially the prepayment clauses, penalty charges, and what happens if you miss an EMI. These details matter.

Don’t borrow more than you need. Banks often approve more than you asked for. Resist the temptation. Every extra rupee borrowed is extra interest paid.

Questions People Actually Ask

What’s a good EMI-to-income ratio? A commonly used guideline is that your total EMIs (across all loans) shouldn’t exceed 40-50% of your monthly take-home salary. Below 30% is comfortable. Above 50% is risky.

Can I reduce my EMI after taking the loan? Yes – through a balance transfer to a bank with a lower rate, or by making a large prepayment which reduces the outstanding principal (and you can ask for the tenure to be reduced).

What happens if I miss an EMI? Missing one EMI usually results in a late fee (₹500-2,000) and a negative mark on your credit score. Missing 3+ consecutive EMIs can lead to the loan being classified as an NPA (Non-Performing Asset), which seriously damages your credit and can lead to legal action.

Is a floating rate loan better than a fixed rate? Floating rates can be lower initially but they change with RBI rate decisions. If rates go up, your EMI goes up too. Fixed rates give you certainty but are usually slightly higher to start with. For home loans, floating is generally recommended because rates tend to fluctuate around a mean over time.

Should I take a longer loan and invest the EMI difference? This is a popular idea – take a 30-year loan instead of 20, save the EMI difference, and invest it. On paper it can work. In practice, most people don’t actually invest the difference consistently. If you’re disciplined enough to do it without fail, it can make sense. If not, the shorter tenure forces the savings automatically.

Know Your Numbers. Own Your Loan.

A loan isn’t just a number the bank gives you. It’s a multi-year commitment that affects your cash flow, your tax situation, and your ability to build wealth alongside it.

This calculator gives you full visibility into what any loan actually costs you – before you sign anything. Use it for every loan you’re considering. Compare tenures. Compare rates. Understand the interest-principal split.

The best loan is the one you fully understand before you take it.

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Disclaimer:

This EMI calculator is provided for educational and informational purposes only. It calculates EMIs using standard amortisation formulas based on the inputs you provide.

Please keep in mind:

• The calculator assumes a fixed interest rate throughout the loan period. Floating rate loans will have EMIs that change when the base rate changes.
• This calculator does not account for processing fees, documentation charges, insurance requirements, or any other charges that banks may levy.
• Tax benefits mentioned are based on current Indian tax laws and may change. Consult a tax advisor for your specific situation.
• The results are mathematical calculations based on your inputs. Actual loan terms are set by the lending institution.
• Nothing here should be treated as advice to take or avoid any specific loan.
• This calculator has no connection to any bank, NBFC, or lending institution.

For guidance on loan decisions, please consult a financial advisor or your bank’s relationship manager.

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Also Try These Calculators on TappingMoney:

• FD Calculator – See what your savings earn in a fixed deposit
• Compound Interest Calculator – Understand how compounding works
• SIP Calculator – Start building wealth alongside your loan repayment
• Retirement Planner – Plan retirement even while paying EMIs
• Lumpsum Calculator – See how a one-time investment grows

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Page last updated: January 2026 | Free to use | No sign-up needed