EMI

EMI stands for Equated Monthly Installment — the fixed rupee amount you pay every month to a lender until your loan is fully repaid. It bundles a slice of the original principal with the interest charged on the outstanding balance, and stays constant through the tenure so you can budget around a single predictable outflow. Almost every retail loan in India — home, car, personal, education, consumer durable — is structured as an EMI product.

Mechanically, the EMI is calculated as P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of months. On a ₹50 lakh home loan at 8.5% for 20 years, the EMI works out to about ₹43,391. In the first EMI roughly ₹35,400 goes to interest and only ₹8,000 reduces principal; by the final year, the split reverses almost entirely.

RBI rules let banks switch between fixed and floating rates, and most retail floating-rate EMIs today are linked to the Repo Linked Lending Rate (RLLR), so a repo cut flows into your EMI within three months. Prepayment on floating-rate loans carries no penalty for individual borrowers under RBI guidelines.

Use our EMI calculator to compare tenures, see the full amortization schedule, and test how a ₹50,000 annual prepayment shaves years off the loan.