loading
loading
loading
Finance
Work out the Equated Monthly Installment for any loan from its amount, interest rate, and tenure — and see how the balance is paid down over time.
EMI stands for Equated Monthly Installment: a fixed payment made every month for the life of the loan. The amount is fixed, but what it's made of changes — each month's payment first covers interest on the outstanding balance, and whatever is left over reduces the principal. Because the balance is largest at the start, the interest portion is largest at the start too (this is called being 'front-loaded'); as the balance shrinks month by month, less of each EMI goes to interest and more goes to paying down principal, so the balance reaches zero exactly at the end of the chosen tenure. The model assumes a fixed interest rate for the full tenure and monthly compounding, with no prepayments, fees, or missed payments — a real loan can differ if the rate floats or you prepay.
No — this model assumes a fixed interest rate, so the EMI stays constant for the whole tenure. Only the split between interest and principal within each EMI changes month to month. A real loan with a floating rate can see its EMI (or tenure) revised when the rate changes.
Interest is charged on the outstanding balance, which is highest right after disbursal. As you pay down principal, the balance — and therefore the interest charged on it — shrinks, so later EMIs shift more toward principal even though the total payment stays the same.
It lowers the monthly EMI, but it usually increases the total interest paid over the life of the loan, since you're carrying a balance (and paying interest on it) for more months. Use the tenure input here to compare the trade-off for your own numbers.