EMI calculator with full amortisation
Work out the monthly instalment on a home, car, personal or business loan — with the total interest, the principal-versus-interest split, a month-by-month schedule you can post straight into your books, and what a part-prepayment would save you.
Amortisation schedule
| Year | Principal | Interest | Balance |
|---|
Post the interest column to Interest on Loan and the principal column against the loan account — only the interest is an expense.
Stop posting EMIs by hand
iAccounting splits each instalment into interest and principal and proposes the entry on its due date — you just approve it. Free desktop accounting for India, free for your first 500 vouchers, with your books staying on your own computer.
Download free See pricingThe formula, and what it means
The EMI formula
Standard reducing-balance instalment, the basis every Indian bank uses.
EMI = P × r × (1+r)n ÷ ((1+r)n − 1)
P is the loan amount, r the monthly rate (annual rate ÷ 12 ÷ 100) and n the tenure in months. The instalment never changes — what changes is the split inside it. Interest is charged on whatever is still outstanding, so it is largest at the start and shrinks every month as the principal comes down.
Why early prepayment wins
The same rupee saves more the sooner you pay it.
A prepayment cancels the interest that amount would have attracted for every remaining month. Pay ₹1 lakh into a 20-year home loan in year two and you avoid nearly two decades of interest on it; do the same in year eighteen and you avoid two years' worth. Keeping the EMI unchanged and letting the tenure shorten always saves more than cutting the EMI and keeping the original tenure — this calculator models the first, better option.
Booking a loan EMI in your accounts
A single instalment is never one entry — it is always a split.
| Account | Debit | Credit |
|---|---|---|
| Interest on Loan — expense, hits P&L | Interest portion | — |
| Loan A/c — liability, reduces | Principal portion | — |
| Bank A/c | — | Full EMI |
Only the interest is deductible as an expense. Booking the whole EMI to an expense head overstates costs and understates the liability — one of the most common errors we see in imported books.
This calculator assumes a fixed rate on a reducing-balance basis with equal monthly instalments, which is how the great majority of Indian retail loans work. It does not model floating-rate resets, moratorium or step-up structures, processing fees, insurance bundled into the loan, GST on charges, or prepayment penalties — all of which change the real cost. Figures are for general guidance; confirm the final schedule with your lender.
EMIs, answered
Why is most of my early EMI interest?
Because interest is charged on the outstanding balance, and that balance is at its highest on day one. On a 20-year loan at 9%, roughly three-quarters of the first year's instalments are interest. The ratio flips towards the end — in the final year almost all of it is principal.
Should I shorten the tenure or reduce the EMI?
Shortening the tenure saves substantially more interest, because you stop paying sooner. Reducing the EMI improves monthly cash flow but stretches the interest over the full original term. This calculator models the tenure-reduction option.
What is a reducing balance rate?
Interest is calculated only on the principal still outstanding, so it falls each month. A "flat" rate charges interest on the original amount for the whole tenure and is far more expensive — a 10% flat rate is roughly 18% reducing. Always compare on a reducing-balance basis.
Can I claim the EMI as a business expense?
Only the interest portion. The principal repayment reduces a liability and is not an expense. For a home loan, interest may also qualify under Section 24(b) and principal under 80C in the old regime — see the income tax calculator.
Does this send my loan details anywhere?
No. The calculation is plain JavaScript running in your own browser. Nothing is uploaded, logged or stored — disconnect from the internet and it still works.
Can I get this schedule into my books automatically?
Yes — iAccounting can hold the loan schedule and propose each month's split entry on its due date, so the interest and principal always land in the right accounts without anyone recalculating.
Loans, GST and books — handled
iAccounting posts your recurring entries, files your GST and keeps the ledgers, with an AI accountant drafting the work. Free for your first 500 vouchers.