How EMI is calculated
EMI stands for Equated Monthly Installment — the fixed amount you pay each month toward a loan until it's fully repaid. It's calculated using the formula EMI = P × r × (1+r)^N ÷ ((1+r)^N − 1), where P is your loan principal, r is the monthly interest rate (annual rate divided by 12 and by 100), and N is the number of monthly installments.
Why EMI stays the same every month
Even though EMI is fixed, the split between principal and interest changes over time — early payments are mostly interest, and later payments are mostly principal. That's why the total interest can look large on long-tenure loans even at a modest interest rate.
Worked example
On a ₹10,00,000 loan at 9% annual interest over 60 months, the EMI comes out to roughly ₹20,758, with total interest of about ₹2,45,000 over the life of the loan.