Monthly instalment, total interest and the month-by-month repayment schedule of any loan.
How the EMI is worked out
An EMI (equated monthly instalment) is the same amount paid every month. On a reducing-balance loan each month's interest is charged only on the principal still owed, so the interest part of the EMI falls and the principal part rises over time.
EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)
P is the loan amount, r the monthly rate as a decimal (annual rate ÷ 12 ÷ 100) and n the number of monthly instalments. For an interest-free loan the EMI is simply P ÷ n.
Reading the schedule
- The opening balance of each month is the closing balance of the month before.
- Interest for the month = opening balance × r, rounded to the paisa; the rest of the EMI repays principal.
- The last EMI is adjusted by a few paise so the loan ends at exactly zero.
Flat rate
Some lenders quote a flat rate: interest on the full loan amount for the whole term, even after you have repaid part of it. A flat rate looks lower than a reducing-balance rate with the same cost. Choose "Flat rate" only if the offer says so, and compare offers by EMI and total cost — the result shows the reducing-balance rate that costs the same.
Results are worked out from the numbers you enter and are for planning only. They are not an offer, an approval or financial advice. Finobazaar does not assume any lender's rate or rules; the lender's loan agreement and its key fact statement decide the actual EMI and charges.