Quick Answer
EMI (Equated Monthly Installment) is calculated as EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan principal, r is the monthly interest rate, and n is the total number of monthly payments.
What Is a Loan / EMI?
An EMI calculator works out the fixed amount you'll pay every month to fully repay a loan — whether it's a personal loan, car loan, or home loan — by a set date. Each EMI payment is split into two parts: a portion that pays down the principal (the amount you originally borrowed) and a portion that covers interest charged by the lender.
In the early months of a loan, most of your EMI goes toward interest. As the loan matures, more of each payment goes toward the principal. This is called amortization, and it's why paying off a loan early can save significant interest — the bank has already collected most of its interest in the early years.
Knowing your EMI in advance lets you budget properly, compare loan offers from different banks, and decide whether a 3-year, 5-year, or 7-year tenure makes more financial sense for your situation.
How to Use This Loan / EMI
- 1Enter the loan amount (principal) you plan to borrow.
- 2Enter the annual interest rate offered by your bank or lender.
- 3Enter the loan tenure in months or years.
- 4The calculator instantly shows your monthly EMI, total interest payable, and total amount repaid over the life of the loan.
The Formula Explained
EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)P = principal, r = monthly interest rate (annual rate ÷ 12 ÷ 100), n = number of months
Total Interest = (EMI × n) − PExample: PKR 1,000,000 loan at 12% annual interest for 5 years
- Principal (P) = 1,000,000
- Monthly rate (r) = 12% ÷ 12 ÷ 100 = 0.01
- Number of months (n) = 5 × 12 = 60
- EMI = 1,000,000 × 0.01 × (1.01)^60 / ((1.01)^60 − 1) ≈ 22,244
Tips & Things to Know
- A longer tenure lowers your monthly EMI but increases the total interest you pay over the life of the loan.
- Even a 1-2% difference in interest rate can change total interest paid by tens of thousands over a 5-year loan — always compare the Annual Percentage Rate (APR), not just the headline rate.
- Making a partial prepayment early in the loan (when more of your EMI is interest) saves more money than the same prepayment made later.
- Some lenders charge a processing fee or prepayment penalty — factor these into your real cost of borrowing, not just the EMI figure.