EMI Calculator

How EMI is calculated

EMI is calculated using the standard reducing balance formula: EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where P is the principal loan amount, r is the monthly interest rate, and n is the tenure in months.

In the early months, a larger portion of your EMI goes toward interest. As the loan matures, more of each payment reduces the principal — this is visible in the amortization schedule.

The truth about "No-Cost EMI"

"No-cost EMI" rarely means zero cost. Here's what actually happens:

• Processing fee (1-2%): Charged upfront or added to EMI amount. On a ₹50,000 product, that's ₹500-₹1,000.
• 18% GST on processing fee: You pay GST on the fee itself. ₹750 fee becomes ₹885.
• Lost cash discount: Many products have a lower price for prepaid/UPI payment that disappears when you choose EMI.
• Subvention removal: The "discount" that makes EMI "free" is sometimes just the product's regular sale price being shown as a separate line item.

When no-cost EMI makes sense

• When the hidden cost is genuinely small (under ₹300 on a ₹50k product)
• When you'd otherwise pay credit card interest at 40% p.a. (EMI at 3-5% is much better)
• When cash flow matters more than total cost (buying something you need now)
• When the product has no cash/prepaid discount difference

Tips to reduce your EMI cost

• Make a larger down payment to reduce the loan principal
• Choose shorter tenure — total interest drops dramatically
• Compare interest rates across banks — even 0.25% makes a difference
• For no-cost EMI, check if the 0% fee option is available (some banks waive it during sales)
• Consider prepaying when you have surplus funds