MoneyDock

EMI Calculator

Calculate EMI for Car, Bike, and Personal loans.

₹
%
Yr

Monthly EMI

₹ 10,624

Principal₹ 500,000
Total Interest₹ 137,411
Total Payable₹ 637,411

An Equated Monthly Installment (EMI) is the fixed amount you pay to a lender at a specific date each month. It’s designed so that by the end of the tenure, you have repaid both the principal amount and the interest.

While Home Loans get all the attention, EMI calculations are equally critical for Personal Loans and Car Loans, where interest rates are significantly higher and traps like "Flat Rates" are common.

⚠️ The "Flat Rate" Trap

Car dealers and NBFCs often quote a "Flat Interest Rate" (e.g., 5%) to make the loan look cheap. Do not be fooled.

In a Flat Rate, interest is calculated on the original principal for the entire tenure, even as you keep repaying it. A Flat Rate of 5% is roughly equivalent to a Reducing Balance Rate of 9-10%. Always ask the lender for the annualized reducing rate to know the true cost.

The EMI Formula

The mathematical formula used by banks for the Reducing Balance method is:

E = [P x R x (1+R)^N] / [(1+R)^N-1]
  • P: Principal Loan Amount
  • R: Monthly Interest Rate (Annual Rate / 12 / 100)
  • N: Loan Tenure in Months

Factors that Spike your EMI

Two hidden factors can significantly impact your monthly outflow:

  1. Credit Score (CIBIL): For unsecured loans like Personal Loans, your score is everything. A score below 700 can increase your interest rate by 2% to 5%, drastically increasing your EMI.
  2. Processing Fees: While not part of the EMI, high processing fees (up to 2% of loan amount) increase the effective cost of borrowing (APR). Always negotiate this.

Frequently Asked Questions

What is No-Cost EMI?

It is essentially a marketing scheme. The interest amount you would have paid is given as an upfront discount on the product price. You still pay the interest to the bank, but the total you pay matches the product's original sticker price.

Is there a penalty for foreclosing a Personal Loan?

Yes. Unlike Home Loans, most banks charge a hefty foreclosure penalty (2% to 5% of outstanding principal) on Personal and Car loans. Always check the 'Foreclosure Charges' clause before signing.

Does checking EMI affect CIBIL score?

No. Using online calculators has zero impact. However, formally applying for a loan with a bank triggers a 'Hard Enquiry' which can dip your score slightly.