Why is most of my early EMI interest?

Interest is charged on the outstanding balance, which is largest at the start. As the balance falls, more of each EMI repays principal.

Does a longer tenure always cost more?

It lowers the EMI but increases total interest, because the money is borrowed for longer.

EMI calculator

Work out the monthly instalment on a home, car or personal loan, the total interest you will pay and how each EMI splits between principal and interest.

How this is calculated

EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), where r = annual rate ÷ 12 ÷ 100 and n = months. If r = 0, EMI = P ÷ n.
Each month: interest = balance × r; principal = EMI − interest; balance = balance − principal. The last instalment absorbs rounding so the balance ends at exactly zero.

Worked example

₹10,00,000 at 10% for 240 months: r = 0.008333…, EMI = ₹9,650.22, total interest ≈ ₹13,16,052.

Assumptions

Fixed rate for the whole tenure (floating rates change the EMI or tenure).
Interest on a reducing monthly balance, rounded to paise each month.
No processing fees, insurance or prepayments.

Frequently asked questions

Why is most of my early EMI interest?: Interest is charged on the outstanding balance, which is largest at the start. As the balance falls, more of each EMI repays principal.
Does a longer tenure always cost more?: It lowers the EMI but increases total interest, because the money is borrowed for longer.