What is EMI?
EMI (Equated Monthly Instalment) is a fixed monthly payment made to a lender on a specific date each month. Each payment covers both the interest accrued and a portion of the principal. In the early months of a loan, the interest component is higher; as the loan matures, more of your payment goes toward the principal — a concept known as loan amortisation.
The EMI Formula
Where P = Principal, r = Monthly interest rate (Annual rate ÷ 12 ÷ 100), n = Total months (Years × 12)
Example: ₹50,00,000 loan at 8.5% for 20 years → r = 0.007083, n = 240
EMI = ₹50,00,000 × 0.007083 × (1.007083)²⁴⁰ ÷ [(1.007083)²⁴⁰ − 1] = ₹43,391/month
EMI Reference Table
| Loan (₹) | 8% / 10yr | 8% / 20yr | 9% / 20yr | 10% / 20yr |
|---|---|---|---|---|
| 10 Lakh | ₹12,133 | ₹8,364 | ₹8,997 | ₹9,650 |
| 25 Lakh | ₹30,333 | ₹20,911 | ₹22,493 | ₹24,126 |
| 50 Lakh | ₹60,665 | ₹41,822 | ₹44,986 | ₹48,251 |
| 1 Crore | ₹1,21,330 | ₹83,644 | ₹89,973 | ₹96,502 |
5 Ways to Reduce Your EMI
- Longer tenure — Spreading payments over more years reduces monthly burden (but increases total interest).
- Larger down payment — Reduces the principal, directly lowering EMI.
- Lower interest rate — Negotiate with your lender or refinance when rates fall.
- Part prepayments — Reduce outstanding principal mid-loan to lower future EMIs.
- Good credit score — A CIBIL score above 750 often qualifies you for 0.5–1% lower rates, saving lakhs over a 20-year loan.
💡 Pro Tip: Paying one extra EMI per year (13 instead of 12) can reduce a 20-year loan to approximately 17 years, saving significant interest.
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