Find the monthly EMI on any loan, the total interest you will pay and how the balance comes down each year. Works for home loans, car loans, personal loans and education loans.
| Year | Principal paid | Interest paid | Balance left |
|---|
Banks use the standard reducing-balance formula:
EMI = P × r × (1 + r)n ÷ [(1 + r)n − 1], where P is the loan amount, r is the yearly rate ÷ 12 ÷ 100 and n is the number of months.
Each EMI first pays the interest due on the balance left, and the rest reduces the loan. That is why the early years of a long home loan go mostly on interest.
| Loan | Amount and rate | EMI | Total interest |
|---|---|---|---|
| Home loan | ₹50 lakh at 8.5% for 20 yrs | ₹43,391 | ₹54.14 lakh |
| Home loan | ₹30 lakh at 8.5% for 15 yrs | ₹29,542 | ₹23.18 lakh |
| Car loan | ₹8 lakh at 9.5% for 5 yrs | ₹16,801 | ₹2.08 lakh |
| Personal loan | ₹5 lakh at 12% for 3 yrs | ₹16,607 | ₹97,858 |
| Education loan | ₹10 lakh at 10% for 7 yrs | ₹16,601 | ₹3.94 lakh |
Rates differ by lender and by your credit score, so check the current rate your bank offers.
About ₹43,391 a month at 8.5% for 20 years. You would pay about ₹54.14 lakh in interest over the loan.
At 9% it is about ₹20,758 a month for 5 years, or ₹12,668 for 10 years.
On a floating-rate loan, yes. When the rate changes, banks usually keep the EMI the same and change the tenure, unless you ask them to change the EMI instead. Fixed-rate loans keep the same EMI.
Reducing the tenure saves more interest. Reducing the EMI eases your monthly budget. If you can afford the current EMI, keep it and shorten the loan.
A common rule is to keep all your EMIs under about 40% of your take-home pay. Lenders also check this before approving a loan.
