How EMI is Calculated: The Formula Explained

EMI = [P × R × (1+R)^N] / [(1+R)^N − 1]

• P = Principal loan amount
• R = Monthly interest rate (annual ÷ 12 ÷ 100)
• N = Total months

Example Loan: ₹5,00,000 at 11% for 36 months - R = 0.00917 - EMI ≈ ₹16,369 - Total interest = ₹89,284

Why It Matters Increasing tenure reduces EMI but increases total interest. Always check the total interest, not just the EMI.