What is EMI?
Equated Monthly Installment
An EMI is the fixed monthly payment you make to a lender to repay a loan — home, car, or personal — over an agreed tenure. Each instalment covers a mix of principal and interest, with the interest component shrinking and the principal component growing over time.
Because EMI is calculated using the reducing-balance method, interest is charged only on the outstanding principal each month, not the original loan amount — this is why extending tenure lowers your EMI but increases the total interest paid over the loan's life.
Formula
EMI = [P × R × (1+R)^N] ÷ [(1+R)^N − 1]