EMI Calculator
An EMI (equated monthly instalment) is the fixed amount you pay your lender every month until a loan is cleared. It covers both interest and part of the principal. The Gunaka EMI calculator works for home loans, car loans, personal loans and education loans, because they all use the same reducing-balance method.
How the EMI is worked out
The formula is EMI = P x r x (1 + r)^n / ((1 + r)^n - 1). Here P is the loan amount, r is the monthly interest rate (the yearly rate divided by 12 and by 100) and n is the number of monthly instalments. In the early years most of each instalment is interest. Over time the share of principal grows, because interest is charged only on the balance that is still unpaid.
A worked example you can check
Take a loan of Rs 50,00,000 at 8.5% a year for 20 years. The monthly rate is 8.5 / 1200 = 0.007083 and n is 240. The EMI comes to about Rs 43,391. Over 20 years you would pay about Rs 1,04,13,879 in total, of which about Rs 54,13,879 is interest. The 8.5% here is only an example: use the rate in your own sanction letter, and ask your lender whether it is a floating rate that can change.
What to look at before you borrow
- Total interest, not just the EMI. A longer tenure lowers the EMI but raises the interest you pay overall.
- Prepayment. Paying extra each month or a lump sum in a year reduces the balance early, which cuts interest and shortens the loan. The Gunaka calculator shows the months and interest saved.
- Fees. Processing fees, insurance and prepayment charges are not part of the EMI formula, so ask your lender for them separately.
- Affordability. Many people keep total EMIs within a comfortable share of monthly take-home pay so that an emergency does not break the budget.
Results are estimates for planning. Your lender's schedule may differ slightly because of rounding, the day count used and changes in a floating rate. This is not financial advice.
Frequently asked questions
How is EMI calculated on a reducing balance?
Interest each month is charged on the outstanding principal, and the fixed EMI is set so that the balance reaches zero after the last instalment, using EMI = P x r x (1 + r)^n / ((1 + r)^n - 1).
Does this EMI calculator work for car and personal loans?
Yes. Any loan that charges interest on the reducing balance uses the same formula. Enter the amount, yearly rate and tenure from your offer.
Does a longer tenure save money?
It lowers the monthly EMI but increases the total interest paid, so compare both numbers before choosing a tenure.
Can I see the effect of prepaying a loan?
Yes. Add a monthly extra amount or a one-time lump sum in the Gunaka EMI calculator to see the interest and months saved.
Is the result exact?
It is an estimate. Your lender's statement can differ because of rounding, fees and floating-rate changes.
Related guides
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- How to read a loan Key Facts Statement: APR, EMI and fees
- Home loan part-payment: no penalty on floating-rate loans, and what it can save
- RBI raised the repo rate to 5.50%: what it can mean for your home loan EMI