Question
How is EMI calculated and how does tenure affect it?
Answer
Bottom line: EMI is a level monthly payment; a longer tenure lowers the EMI but raises the total interest.
1. The formula
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1), where r is the monthly rate and n the number of months.
2. Interest split
Early EMIs are mostly interest, later ones mostly principal.
3. Tenure effect
Stretching the loan reduces each EMI but you pay far more interest overall.
Work it out with our EMI Calculator.
This answer is general information based on the law as it stood when written and is not professional advice on your specific situation. Verify the current position and consult a qualified professional before acting. See our disclaimer.