Loan & EMI Calculator
Work out the fixed monthly payment (EMI), total cost, and total interest on an amortizing loan.
60 payments
The fixed monthly payment is EMI = P · r(1+r)ⁿ ÷ ((1+r)ⁿ − 1), where P is the loan amount, r the monthly rate, and n the number of months. A $10,000 loan at 6% over 5 years (r = 0.005, n = 60) costs about $193.33 a month — roughly $1,600 in total interest.
What an EMI actually is
EMI stands for equated monthly installment: a single fixed amount you pay every month so the loan is fully repaid by the end of the term. Each payment is split between interest on the remaining balance and principal that pays the loan down. Early on most of the payment is interest; as the balance shrinks, more of each payment goes to principal. The payment itself never changes — only the split does.
r = annual% ÷ 100 ÷ 12 (monthly rate); n = years × 12 (months). If r = 0, EMI = P ÷ n.
Worked example
You borrow $10,000 at 6% annual interest for 5 years.
- 1 Find the monthly rate. r = 6 ÷ 100 ÷ 12 = 0.005 (half a percent per month).
- 2 Find the number of payments. n = 5 × 12 = 60 months.
- 3 Raise (1 + r) to the n. (1.005)⁶⁰ ≈ 1.34885.
- 4 Apply the EMI formula. EMI = 10,000 × 0.005 × 1.34885 ÷ (1.34885 − 1) ≈ $193.33.
- 5 Get the totals. Total paid = 193.33 × 60 ≈ $11,599.68; interest = 11,599.68 − 10,000 ≈ $1,599.68.
How rate and term change a $10,000 loan
Same principal; a higher rate or longer term raises total interest. A longer term lowers the monthly payment but costs more overall.
| Rate | Term | Monthly payment | Total interest |
|---|---|---|---|
| 6% | 3 years | $304.22 | $951.90 |
| 6% | 5 years | $193.33 | $1,599.68 |
| 6% | 7 years | $146.09 | $2,271.19 |
| 9% | 5 years | $207.58 | $2,455.01 |
| 12% | 5 years | $222.44 | $3,346.67 |
Longer term, lower payment — but more interest
Stretching a loan over more months shrinks each payment, which is why a 7-year term feels cheaper month to month than a 3-year one. The catch is that you carry the balance longer, so interest accrues for longer: the $10,000 loan above costs about $952 in interest over 3 years but more than $2,200 over 7. A lower monthly payment is not the same as a cheaper loan.
The process of paying a loan down with fixed installments is called amortization. An amortization schedule lists, for every month, how much of the payment is interest, how much is principal, and the remaining balance. Because the balance falls each month, the interest portion falls and the principal portion rises — so the principal-vs-interest split tilts steadily toward principal even though the payment stays flat. Paying anything extra goes straight to principal, which shortens the term and cuts total interest more than the extra amount itself.