EMI calculator
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The equated monthly instalment is the single payment that clears a loan's principal and its interest across the whole term. It never changes, which is the point of it — but what sits inside it changes every month, and that is what decides whether a prepayment is worth making and when.
The formula
E = P·r·(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the amount borrowed, r is the annual rate divided by twelve, and n is the number of payments. At a rate of zero the formula is undefined but the loan is not: you simply repay P in n equal parts.
A worked example
A $250,000 loan at 8.75% over 20 years:
| Monthly instalment | $2,209 |
|---|---|
| Total interest | $280,225 |
| Total repaid | $530,225 |
| Interest vs loan | 112% |
| Interest in month 1 | $1,823 |
| Interest in the final month | $16 |
What to watch
- The instalment is rounded to the cent once and charged every month; the final payment is a stub that clears the remainder. A schedule of identical payments is not a real one.
- Halving the rate does not halve the instalment, and doubling the term does not halve it either. Both relationships are curved, which is why guessing is unreliable.
- Processing fees, insurance and documentation charges are usually added to the loan rather than paid up front, which quietly raises both the instalment and the interest.
- A floating rate changes the term, not the instalment: most lenders keep the payment and extend the loan instead, so a rate rise is invisible on your bank statement.
The trap
Comparing instalments between lenders instead of total interest. A longer term always produces a smaller instalment and a larger bill, so the cheapest-looking monthly payment is frequently the most expensive loan.
Questions
How is EMI calculated?
With the formula above. On our $250,000 example at 8.75% over 20 years it gives $2,209 a month, of which $280,225 is interest across the whole term — about 112% of what was borrowed.
Does a higher down payment reduce the EMI?
Yes, proportionally: the instalment scales directly with the amount borrowed, so putting down ten per cent more reduces the payment by ten per cent. It also reduces the total interest by the same proportion, which is the larger saving.
Can the EMI change during the loan?
On a fixed rate, no. On a floating rate most lenders hold the instalment and adjust the term instead, so a rate rise shows up as extra months rather than a larger payment — and it is easy to miss until you check the closing date.
Rate bands and lending rules on this page were last reviewed on 2026-10-23 and are indicative, not offers. The arithmetic is produced by the same code the calculator runs. Confirm the terms with your own lender before committing; nothing here is financial advice.