What is an EMI?
EMI stands for equated monthly instalment. It's the fixed amount you pay your bank every month until the loan is cleared. Each payment covers that month's interest first, and the rest reduces what you owe.
Early on, most of your EMI goes to interest, because the balance is still large. As the balance shrinks, more of each payment goes to the principal. The schedule in the calculator shows exactly how that shifts over time.
The EMI formula
Banks use the reducing-balance method. The formula is EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where P is the loan amount, r is the monthly interest rate (the yearly rate ÷ 12 ÷ 100) and n is the number of monthly payments.
For example, a loan of Rs 10,00,000 at 10% a year for 5 years (60 months) has an EMI of about Rs 21,247. Over the five years you pay about Rs 2,74,822 in interest.
How to pay less interest
- Shorter tenure: a higher EMI over fewer years almost always costs far less in total interest.
- Prepay early: extra payments in the first few years cut the balance while interest is at its highest.
- Compare the rate type: many loans in Nepal and India are floating rate, tied to a base rate that can change. Check how often your bank resets it.
- Watch the fees: processing fees, insurance and prepayment charges aren't part of the EMI but add to the real cost.
- Flat vs reducing: a 'flat rate' quote charges interest on the full original amount for the whole loan. It looks lower than a reducing-balance rate but usually costs more.
Good to know
This calculator assumes a fixed rate for the whole loan and payments at the end of each month, which is how most banks quote EMIs. Your bank's figure may differ by a few rupees because of rounding, the exact start date, or fees. Treat this as a reliable estimate, and confirm the final number with your lender.
EMI table at 10% interest
Monthly EMI by loan amount and tenure, at a 10% yearly rate on a reducing balance. Total interest is in brackets.
- Rs 5 lakh: 10,624 over 5 years (1.37 lakh), 6,608 over 10 years (2.93 lakh), 4,825 over 20 years (6.58 lakh)
- Rs 10 lakh: 21,247 over 5 years (2.75 lakh), 13,215 over 10 years (5.86 lakh), 9,650 over 20 years (13.16 lakh)
- Rs 20 lakh: 42,494 over 5 years (5.50 lakh), 26,430 over 10 years (11.72 lakh), 19,300 over 20 years (26.32 lakh)
- Rs 50 lakh: 1,06,235 over 5 years (13.74 lakh), 66,075 over 10 years (29.29 lakh), 48,251 over 20 years (65.80 lakh)
How much loan can I get?
Banks look at how much of your income already goes to debt. Many cap total EMIs at roughly 40 to 50% of take-home pay, and in Nepal the central bank's rules also limit how much of your income loan repayments can take. Work backwards: if you can afford Rs 25,000 a month at 10% for 10 years, that supports a loan of about Rs 19 lakh.
Check your lender's current rate and fees before you commit; the rate you are quoted can differ from the advertised base rate plus premium.