Why is so much of my early EMI going to interest?

Interest is charged on the outstanding balance, which is highest at the start. In month one of a 20-year loan at 8.5%, roughly 82% of the instalment is interest. That proportion falls every month as the balance reduces.

Does a longer tenure make a loan cheaper?

It lowers the monthly payment but raises the total cost substantially, because you are paying interest for longer. On a ₹10 lakh loan at 8.5%, extending from 15 to 20 years cuts the EMI by around ₹1,170 a month but adds roughly ₹3.6 lakh in total interest.

Will my bank quote exactly this EMI?

Usually within a few rupees. Differences come from rounding, whether interest accrues monthly or daily, and any fees the lender adds into the principal. Treat this as an accurate planning figure and confirm the exact amount on your sanction letter.

Finance

EMI Calculator

Work out the monthly instalment on a home, car or personal loan, and see exactly how much of it is interest.

Updated 3 Sep 2026

Loan amount The amount you want to borrow

Annual interest rate The yearly rate quoted by your lender

Loan tenure

Tenure unit

Years Months

Monthly EMI ₹8,678.23

Total interest ₹1,082,775.76

Total repayment ₹2,082,775.76

Interest share 52.0%

Principal (P)1,000,000.00

Monthly rate (r)0.00708333

Number of payments (n)240

(1+r)^n5.441243

On a loan of 1,000,000 at 8.50% for 240 months, the monthly instalment is 8,678.23. You repay 2,082,775.76 in total, of which 1,082,775.76 (52.0%) is interest.

Yearly repayment breakdown

Period	Principal paid	Interest paid	Balance
Year 1	19,902	84,236	980,098
Year 2	21,661	82,477	958,436
Year 3	23,576	80,563	934,860
Year 4	25,660	78,479	909,200
Year 5	27,928	76,211	881,272
Year 6	30,397	73,742	850,875
Year 7	33,084	71,055	817,791
Year 8	36,008	68,131	781,784
Year 9	39,191	64,948	742,593
Year 10	42,655	61,484	699,938
Year 11	46,425	57,714	653,513
Year 12	50,529	53,610	602,985
Year 13	54,995	49,144	547,990
Year 14	59,856	44,283	488,134
Year 15	65,147	38,992	422,987
Year 16	70,905	33,234	352,082
Year 17	77,172	26,966	274,910
Year 18	83,994	20,145	190,916
Year 19	91,418	12,721	99,498
Year 20	99,498	4,640	0

Quick answer

Enter the loan amount, the annual interest rate and the tenure. The calculator returns your monthly EMI, the total interest you will pay across the term, and the total amount repaid.

What is the EMI Calculator?

EMI stands for Equated Monthly Instalment: the fixed amount you pay a lender every month until a loan is cleared. The amount stays the same throughout the term, but its composition changes. Early instalments are mostly interest; later ones are mostly principal.

That shift is why paying off a loan early saves so much. In the first years you are barely reducing what you owe.

How to use the EMI Calculator

Enter the loan amount you want to borrow.
Enter the annual interest rate your lender quoted — the rate on the sanction letter, not the monthly rate.
Enter the tenure and choose whether it is in years or months.

The result updates as you type. Try shortening the tenure by a few years to see how sharply the total interest falls.

Formula

EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)

P = principal (the loan amount)
r = monthly interest rate = annual rate ÷ 12 ÷ 100
n = number of monthly payments

The annual rate must be converted to a monthly rate before it enters the formula. A quoted 8.5% per year becomes 0.085 ÷ 12 = 0.00708 per month. Skipping that conversion is the single most common mistake when people check this by hand.

How the calculation works

The formula is the standard annuity payment equation. It finds the fixed monthly amount whose present value, discounted at the monthly interest rate, exactly equals the loan principal.

Each month the lender charges interest on the outstanding balance. Whatever is left of your instalment after that interest reduces the principal. Because the balance falls, the interest portion falls too, so more of each subsequent payment goes to principal.

Worked example

Take a home loan of ₹10,00,000 at 8.5% per year for 20 years.

Monthly rate r = 8.5 ÷ 12 ÷ 100 = 0.00708333
Number of payments n = 20 × 12 = 240
(1 + r)²⁴⁰ = 5.4098
EMI = 1000000 × 0.00708333 × 5.4098 ÷ (5.4098 − 1) = ₹8,678.23

Over 240 months you repay ₹20,82,775 — of which ₹10,82,775 is interest. You pay more in interest than you borrowed.

Uses and benefits

Check a lender's quoted EMI before you sign anything.
Compare offers where the rate and tenure both differ.
See the true cost of a longer tenure: lower monthly payments, far higher total interest.
Work backwards from an affordable monthly figure to a sensible loan size.

Frequently asked questions

EMI uses the annuity formula: P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the principal, r is the monthly interest rate and n is the number of monthly payments. The annual rate must be divided by 12 to get r.

References

The annuity formula used here is standard across lenders. Your bank's actual figure may differ by a few rupees depending on day-count conventions, processing fees and whether interest is charged monthly or daily. Always confirm against the amortisation schedule your lender provides.