How this calculator works
Your EMI is calculated using the standard reducing-balance formula that Indian banks and NBFCs use for most loans:
EMI = P × r × (1+r)n / ((1+r)n − 1)
Where P is your loan amount (principal), r is the monthly interest rate (your annual rate ÷ 12 ÷ 100), and n is the number of monthly instalments (loan tenure in years × 12).
Your total payment over the life of the loan is EMI × n, and your total interest is total payment minus the principal you borrowed.
Why EMI stays flat while interest doesn't
Even though your EMI is a fixed amount every month, the split between principal and interest inside each instalment changes over time. Early in the loan, a larger share of your EMI goes toward interest because the outstanding principal is still high. As the principal reduces month by month, more of each EMI goes toward paying down the principal itself — this is what "reducing balance" means.
Shunya doesn't offer loans — but if this EMI is for a business purchase or expansion, our CA team can help with registration, compliance, and filings around it.
Talk to Shunya →How is EMI calculated?
EMI is calculated using the reducing-balance formula: EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is the loan amount, r is the monthly interest rate (annual rate ÷ 12 ÷ 100), and n is the number of monthly instalments. This calculator applies that formula directly to whatever amount, rate, and tenure you enter.
Does EMI stay the same throughout the loan?
Yes for fixed-rate loans — the EMI amount stays constant for the entire tenure. Floating-rate loans can change if the lender's benchmark rate changes, which usually adjusts either your EMI amount or your remaining tenure.
What's the difference between reducing balance and flat rate?
This calculator uses the reducing balance method, the standard for most loans in India — interest is charged only on the outstanding principal, which shrinks with every payment. Flat rate, less common, charges interest on the original principal for the entire tenure, which would show a lower quoted rate for the same real cost of borrowing.
Can I prepay to reduce interest?
Yes — prepayment reduces your outstanding principal early, which cuts the total interest you pay over the life of the loan. This calculator shows your EMI for the full original tenure and doesn't model prepayment scenarios; check with your lender for prepayment charges and the exact interest savings.
This tool is for quick estimation only and is not a substitute for professional financial or tax advice. For your specific situation, consult a practicing CA.
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