Loan EMI Explained: Formula, Examples & How to Reduce It

Equated Monthly Installment (EMI) is the fixed amount you pay every month to repay a loan.

EMI formula

EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is principal, r is monthly interest rate, n is months.

Three variables: principal amount, interest rate, and tenure. Reducing any one lowers EMI.

Larger down payment, longer tenure, or refinance when rates drop.

Even small extra payments save significant interest over the life of the loan.

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