How to calculate EMI
EMI (Equated Monthly Installment) is the constant monthly amount you pay toward the principal and interest of a fixed-rate loan. Plug in the loan amount, the APR, and the loan term; every EMI calculator (including this site’s estimator) uses the same math.
Once you understand the formula below you can validate the numbers that the calculator gives you and compare multiple loan offers with confidence.
EMI formula
EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1)
P is the loan principal, r is the monthly interest rate (APR ÷ 12 ÷ 100), and n is the total number of months in the loan term.
Step-by-step
- Convert the APR to a monthly rate by dividing by 12 and then by 100 (for example, 15% APR → 0.0125 monthly).
- Raise (1 + r) to the power of n to account for compounding, then subtract 1 to isolate the interest factor.
- Multiply the principal by r and the compounded factor, then divide by the final denominator to find the monthly payment.
- Compare the result to the calculator’s output to ensure you’re seeing consistent EMI and total interest values.
Example breakdown
A $25,000 personal loan at 12% APR over 36 months uses r = 0.01. Plugging into the formula yields an EMI around $832, which tallies with the estimator above.
Always double-check the APR your lender quotes — a small change (say 0.5%) can shift your monthly payment by $10–$20 on a mid-size loan.