What is EMI?
An Equated Monthly Instalment (EMI) is the fixed monthly payment a borrower makes to a lender across the full tenure of a retail loan. Every EMI has two parts — a principal portion that repays the borrowed amount, and an interest portion that pays the lender for the use of capital. Indian retail loans use the reducing balance method under RBI guidelines: interest is computed on the outstanding principal each month, so as you repay, the interest portion shrinks and the principal portion grows.
The same EMI formula applies across all retail loan types — home loans, car loans, two-wheeler loans, personal loans, education loans, business loans, gold loans, loans against property — only the principal, rate, and tenure differ. The exception is credit-card EMI, which most banks compute on a flat-rate basis (see the credit-card EMI calculator).
How is EMI calculated?
The RBI-mandated formula is:
EMI = P × R × (1+R)ⁿ / ((1+R)ⁿ − 1)
| Variable | Meaning |
|---|---|
| P | Principal (loan amount) in INR |
| R | Monthly interest rate = annual rate ÷ 12 ÷ 100 |
| n | Tenure in months (years × 12) |
The calculator above accepts any combination of these three inputs. Use it to model “what-if” scenarios on rate, principal, or tenure.
Indian retail loan reference rates
These are typical rate bands for June 2026; check our cluster pillars for current bank-specific quotes.
| Loan type | Typical rate range | Typical tenure |
|---|---|---|
| Home loan | 8.40% – 10.00% | up to 30 years |
| Car loan | 9.00% – 13.00% | 1–7 years |
| Two-wheeler loan | 11.00% – 21.00% | 1–4 years |
| Personal loan | 10.50% – 24.00% | 1–5 years |
| Education loan | 8.30% – 13.50% | 5–15 years |
| Business loan | 11.00% – 24.00% | 1–7 years |
| Gold loan | 8.50% – 26.00% | 3–36 months |
| Loan against property | 9.00% – 14.50% | up to 15 years |
| Credit-card EMI | 12.00% – 20.00% | 3–24 months |
Factors that affect your EMI
- Principal amount — directly proportional. Doubling the loan doubles the EMI.
- Interest rate — non-linear; impact grows with tenure.
- Tenure — longer tenure lowers monthly EMI but raises total interest.
- Rate type — floating (repo-linked for post-Oct-2019 loans) versus fixed.
- Credit profile — your credit score determines the spread your lender charges over their published rate.
- Existing obligations — FOIR caps how much new EMI you can take on.
Compute the upfront cost
Beyond the EMI, factor in the one-time charges:
- Processing fee — 0.25%–3% of loan amount depending on loan type
- 18% GST on processing fee
- Stamp duty on the loan agreement (state-specific)
- For home loans: registration charges and stamp duty on property (separate from loan)