How to Calculate a Loan EMI and Total Interest

Find the monthly payment and what the loan costs

A level-payment loan is fixed by three numbers: the amount borrowed, the rate and the number of months. From them follow the monthly payment, the interest in every payment and the total cost. This guide works through the arithmetic and shows where a real schedule departs from the textbook formula.

EMI on a reducing balance

An EMI, or equated monthly instalment, is a level monthly payment that repays a loan with interest over a fixed number of months. On a reducing balance, each month's interest is charged only on the amount still owed. The payment first covers that interest and the rest reduces the balance, so the interest share falls and the principal share rises with every payment.

The same payment structure is called an amortising loan, a repayment loan or a principal-and-interest loan in other markets. The RBI uses the term equated periodic instalment, and calls a monthly one an EMI.

Compare terms, rates and amounts before you borrow

Change one input at a time. A longer term lowers the payment and raises total interest. A higher rate raises both. A larger amount scales the payment almost exactly in proportion. The chart shows the balance falling slowly at first and faster later, because early payments are mostly interest.

From the annual rate to a level payment

Divide the annual rate by 12 to get the monthly rate. The mathematical payment is the loan amount times the monthly rate, divided by one minus (1 + monthly rate) raised to minus the number of months. At a zero rate it is the loan amount divided by the number of months. The calculator then finds the smallest payment in steps of 0.01 whose month-by-month ledger clears the loan within the term, and reports the last payment separately.

EMI = P × r ÷ (1 − (1 + r)^−n), with r = annual rate ÷ 12 ÷ 100

Reconcile 100,000 at 12% over 12 months

Borrow 100,000 at 12% a year for 12 months. The monthly rate is 1%. The mathematical payment is 8,884.878868, so the payment is 8,884.88. In month 1 interest is 1,000.00 and 7,884.88 reduces the balance to 92,115.12. After 6 payments 51,492.09 is still owed. The twelfth payment is 8,884.85, which clears the remaining balance and its interest. Total interest is 6,618.53 and all payments add up to 106,618.53.

A smaller case can be checked by hand. Borrow 1,200 at 12% for 3 months: the mathematical payment is 408.0265, so the payment is 408.03. Interest is 12.00, then 8.04, then 4.04. The balance falls to 803.97, then 403.98, and the last payment is 408.02. Total interest is 24.08.

1. Enter a loan amount of 100000, an annual rate of 12 and a term of 12 months.
2. Read the payment of 8,884.88, the final payment of 8,884.85 and total interest of 6,618.53.
3. Open the chart's table to follow the balance, interest paid and principal repaid after each payment.

Enter the amount, the reducing-balance rate and the months

Enter the amount borrowed, not the price of what you are buying. Enter the annual rate your lender applies to the reducing balance, and the term as a whole number of months: 5 years is 60. Choose a market for number formatting only.

Read the payment, the split and the total

The payment is what leaves your account each month. Total interest is the cost of borrowing under these terms, before any fees. The first-payment split shows how much of an early payment is interest. The equivalent effective annual rate shows what a monthly-charged rate amounts to over a year: 12% charged monthly is 12.6825%.

The mathematical payment is shown beside the payable one so the effect of rounding is visible. Multiplying the unrounded figure by the number of months gives a total that no real schedule produces; the calculator's total is the sum of the payments in its own ledger.

One fixed rate, equal months, payments in arrears

A fixed nominal annual rate charged at one twelfth each month, equal model months, payments at the end of each month starting one month after the loan is drawn, and no fees, taxes, insurance, prepayments, missed payments or rate changes. Interest is rounded half up to 0.01 each month.

What the figures leave out

Loan amounts above 0 up to 1 trillion with at most 2 decimal places, annual rates from 0% to 100% with up to 12 decimal places, and terms from 1 to 600 whole months. For a very small loan the 0.01 payment step can clear the balance in fewer payments than entered, and the calculator says so.

Processing fees, insurance, taxes on interest or fees, a first period longer or shorter than a month, actual-day interest, floating rates and prepayment are outside the model. Each can change the payment or the cost.

Flat rates, years for months and unrounded totals

Do not enter a flat rate as if it were a reducing-balance rate: a flat rate charges interest on the original amount for the whole term and costs far more at the same percentage. Do not multiply the unrounded payment by the number of months to get the total; the last payment differs. Do not enter the term in years.

Rate conventions differ by country

In India, lenders give a Key Facts Statement with the APR and the repayment schedule; some products are still advertised with flat rates. In the United States a loan's APR includes certain fees on top of the interest rate. In the United Kingdom representative APRs are advertised and the rate you are offered can differ. In Australia a comparison rate combines interest with most fees. Canadian fixed-rate mortgages are usually quoted with semi-annual compounding, which this calculator does not apply. The market selector changes number formatting only.

EMI compared with simple and compound interest

Simple interest on a fixed amount ignores repayments, so it overstates the interest on a loan that is repaid monthly. Compound growth of a deposit runs the other way, with a balance that rises. A level-payment loan is the present value of its payments at the monthly rate, which is why the Present Value Calculator gives back the loan amount from the unrounded payment.

Educational scope

Educational arithmetic for a fixed-rate, level-payment loan. It is not a loan offer, a lender's schedule, an APR or comparison-rate disclosure, or financial advice. A lender's rounding, day count, fees and payment dates will differ; rely on the loan agreement and its repayment schedule.

Frequently asked questions

Sources and review

Sources reviewed Nov 14, 2026. Consult current local rules before relying on time-sensitive information.

• CFPB: what amortization is
• CFPB: negative amortization
• RBI: Key Facts Statement for loans and advances
• MoneyHelper mortgage repayment calculator
• Moneysmart: personal loans
• eCampusOntario: Canadian mortgages and semi-annual compounding