Loans & Debt
Equated monthly instalment
The level payment whose present value equals the principal borrowed.
The Formula
EMI = P x r x (1+r)^n / ((1+r)^n - 1)
The level payment whose present value equals the principal borrowed.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| P | Principal | currency | Amount borrowed. |
| r | Monthly rate | rate | Annual rate divided by twelve. |
| n | Months | count | Total number of payments. |
What Each Symbol Means
Pcurrency
Principal
Amount borrowed.
rrate
Monthly rate
Annual rate divided by twelve.
ncount
Months
Total number of payments.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate emi page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate EMI, filed under Finance. Every number the guide produces comes from substituting into this one line.