EMI Formula
The Equated Monthly Instalment is calculated using:
EMI = P × r × (1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where:
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Number of monthly instalments
This formula assumes a fixed interest rate with equal monthly payments (amortised loan).
Tips for Reducing EMI
- Make a larger down payment to reduce the principal
- Choose a longer loan tenure (but you will pay more total interest)
- Negotiate a lower interest rate or refinance when rates fall
- Make prepayments when possible to reduce the outstanding principal