The EMI formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly interest rate (yearly rate ÷ 12 ÷ 100) and n is the number of months.
Tips
- A longer tenure lowers the EMI but raises the total interest.
- Part-prepayments early in the loan save the most interest.
- Compare the annual percentage rate, including processing fees, not just the interest rate.