How EMI is calculated
EMI stands for Equated Monthly Instalment — the fixed amount you pay every month towards a loan until it's fully repaid. It's calculated using the loan amount (principal), the annual interest rate, and the loan tenure in months.
The formula is: EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the principal, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly instalments. A longer tenure lowers your monthly EMI but increases the total interest you pay over the life of the loan.