Whether you are planning to buy a dream home or a new car, understanding your Equated Monthly Installment (EMI) is the first step to financial freedom. Many people blindly trust bank representatives, but knowing the math can save you thousands.
The EMI Formula Explained
The standard formula used by almost all financial institutions is:
- P (Principal): The loan amount.
- R (Rate): Interest rate per month (Annual Rate / 12 / 100).
- N (Tenure): Loan duration in months.
How to Reduce Your EMI Burden
1. Prepayments: Making even one extra EMI payment per year can reduce your loan tenure by years.
2. Higher Down Payment: Paying 20-30% upfront reduces the principal, lowering total interest significantly.
3. Refinancing: If market rates drop, switch your loan to a lender offering a lower interest rate.
Try It Yourself
Don't do the math manually. Use our free tool to see your amortization schedule instantly.
Open EMI CalculatorFixed vs. Floating Interest Rates
In a Fixed Rate loan, your EMI remains constant, offering peace of mind. In a Floating Rate loan, the EMI changes with market trends. Historically, floating rates tend to be cheaper in the long run, but they carry risk during inflation periods.