How EMI is calculated
EMI uses the reducing balance method: EMI = [P × R × (1+R)^N] / [(1+R)^N – 1], where P is principal, R is monthly interest rate, and N is tenure in months. This is the same formula used by most Indian lenders.
Flat rate vs reducing balance
Flat rate loans charge interest on the full principal throughout the tenure, making them costlier. Reducing balance loans charge interest only on the outstanding amount. Our comparison tool shows the exact difference in EMI and total payment.
Frequently asked questions
How accurate is the EMI calculator?
Our EMI calculator uses the standard reducing-balance formula. Results are estimates — confirm final EMI with your bank or lender.
Can I calculate SIP returns?
Yes, our SIP calculator projects maturity value based on monthly investment, expected return rate, and investment period.
What is flat vs reducing interest?
Flat rate charges interest on the original loan amount throughout. Reducing balance charges interest only on the remaining principal, resulting in lower total interest paid.