{"id":89,"date":"2026-04-28T04:55:44","date_gmt":"2026-04-28T04:55:44","guid":{"rendered":"https:\/\/borrowww.com\/blog\/?p=89"},"modified":"2026-04-28T05:24:43","modified_gmt":"2026-04-28T05:24:43","slug":"emi-calculation-formula-with-example-india","status":"publish","type":"post","link":"https:\/\/borrowww.com\/blog\/2026\/04\/28\/emi-calculation-formula-with-example-india\/","title":{"rendered":"EMI Calculation Formula with Example (India)"},"content":{"rendered":"\n<p>While opting for any loan in India, lenders don\u2019t ask for the borrowed amount at one go; rather, they divide the amount in monthly instalments for the repayment. These instalments are also known as EMI (Equated Monthly Instalments). The EMI comprises both principal and interest due to the lender. Let us understand the concept in detail so that you can plan the borrowings and repayments well before taking any loans and help to avoid any surprises.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What Is EMI?<\/strong><\/h3>\n\n\n\n<p>The equated monthly instalment, or EMI as we call it in simple terms, comprises a fixed amount that is paid monthly over a fixed period of time, which is decided at the time of sanction of the loan. Each EMI consists of two components: an amount that is towards principal repayment, i.e., the borrowed amount, and another portion that goes towards interest charged by the lender on the principal amount.<\/p>\n\n\n\n<p>Generally, the interest component is higher during the initial installments, which is due to interest being charged on the reducing balance. As the loan matures, the ratio of interest and principal payment reverses, making a larger amount getting adjusted towards the principal outstanding.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>The EMI Calculation Formula<\/strong><\/h3>\n\n\n\n<p>Banks and NBFCs in India use the <strong>reducing balance method<\/strong> to calculate EMI. The standard formula is:<\/p>\n\n\n\n<p><strong>EMI = [P \u00d7 R \u00d7 (1 + R)^N] \u00f7 [(1 + R)^N \u2212 1]<\/strong><\/p>\n\n\n\n<p>Where:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>P<\/strong> = Principal loan amount (in \u20b9)<\/li>\n\n\n\n<li><strong>R<\/strong> = Monthly interest rate = Annual interest rate \u00f7 12 \u00f7 100<\/li>\n\n\n\n<li><strong>N<\/strong> = Loan tenure in months<\/li>\n<\/ul>\n\n\n\n<p>This formula accounts for compound interest on the outstanding principal, which reduces with every payment \u2014 hence the name &#8220;reducing balance.&#8221;<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Step-by-Step Example<\/strong><\/h3>\n\n\n\n<p>Let us understand this with the help of a simple example. For a <strong>home loan of \u20b950,00,000<\/strong> at an <strong>annual interest rate of 7.5%<\/strong> for <strong>20 years (240 months)<\/strong>.<\/p>\n\n\n\n<p><strong>Step 1 \u2014 Find the monthly rate (R):<\/strong> R = 7.5 \u00f7 12 \u00f7 100 = <strong>0.00625<\/strong><\/p>\n\n\n\n<p><strong>Step 2 \u2014 Calculate (1 + R)^N:<\/strong> (1 + 0.00625)^240 = <strong>4.4650 <\/strong>(approx.)<\/p>\n\n\n\n<p><strong>Step 3 \u2014 Apply the formula:<\/strong> EMI = [30,00,000 \u00d7 0.00625 \u00d7 4.4650] \u00f7 [4.4650 \u2212 1]&nbsp;<\/p>\n\n\n\n<p><strong>EMI \u2248 \u20b940,280 per month<\/strong><\/p>\n\n\n\n<p><strong>Step 4 \u2014 Total amount paid over 20 years:<\/strong> \u20b940,280 \u00d7 240 = <strong>\u20b996,67,200<\/strong><\/p>\n\n\n\n<p><strong>Step 5 \u2014 Total interest paid:<\/strong> \u20b996,67,200 \u2212 \u20b950,00,000 = <strong>\u20b946,67,200<\/strong><\/p>\n\n\n\n<p>This means for a \u20b950 lakh loan at 7.5%, you end up paying over \u20b947 lakhs (approx.) purely as interest over 20 years \u2014 an important eye opener for any borrower.&nbsp;<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"1200\" height=\"592\" src=\"https:\/\/borrowww.com\/blog\/wp-content\/uploads\/2026\/04\/image1.jpg\" alt=\"\" class=\"wp-image-91\"\/><\/figure>\n\n\n\n<p>You can use the below link to calculate the EMI and the breakup of interest and principal using the link &#8211; <a href=\"https:\/\/borrowww.com\/emi\">EMI Calculator Online | Home, Personal, Business Loan &amp; LAP &#8211; Borrowww<\/a><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Factors That Affect EMI<\/strong><\/h3>\n\n\n\n<p>The EMI is affected by several factors, the most important being the loan amount\u2014a higher principal payment increases the monthly EMI amount, which helps in the reduction of the tenure of the loan. The shorter the loan tenure, the lower the interest rate to be paid to the bank. The second most important factor is rate of interest; even a change in 0.05% ROI makes thousands of rupees change in the monthly EMI for a substantial loan amount. Third is the tenure, which works inversely, i.e., the higher the tenure, the lower the EMI, and the lower the tenure, the higher the EMI.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>While opting for any loan in India, lenders don\u2019t ask for the borrowed amount at one go; rather, they divide [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":95,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[5],"tags":[],"class_list":["post-89","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"_links":{"self":[{"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/posts\/89","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/comments?post=89"}],"version-history":[{"count":2,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/posts\/89\/revisions"}],"predecessor-version":[{"id":92,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/posts\/89\/revisions\/92"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/media\/95"}],"wp:attachment":[{"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/media?parent=89"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/categories?post=89"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/borrowww.com\/blog\/wp-json\/wp\/v2\/tags?post=89"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}