Loan EMI Calculator
Enter the loan amount, yearly interest rate and tenure to see your monthly instalment, the total interest you will pay and how the balance falls each year.
What is an EMI?
An equated monthly instalment (EMI) is the fixed amount you pay every month until a loan is repaid. Each instalment covers that month's interest on the outstanding balance plus part of the principal. Early on most of the payment is interest; as the balance falls, more of each instalment goes to principal. This calculator uses the standard reducing-balance method used by banks for car, home and personal loans.
The formula
EMI = P × r × (1 + r)n ÷ ((1 + r)n − 1), where P is the loan amount, r is the monthly rate (yearly rate ÷ 12 ÷ 100) and n is the number of months. For Rs 1,000,000 at 18% for 3 years: r = 0.015, n = 36, EMI = Rs 36,152, and the total interest is Rs 301,486.
Examples
| Loan | Rate | Tenure | EMI | Total interest |
|---|---|---|---|---|
| Rs 1,000,000 | 18% | 3 years | Rs 36,152 | Rs 301,486 |
| Rs 2,500,000 | 14% | 5 years | Rs 58,171 | Rs 990,238 |
| Rs 5,000,000 | 12% | 20 years | Rs 55,054 | Rs 8,213,034 |
The 20-year example shows how tenure drives cost: the interest is more than one and a half times the amount borrowed. A shorter tenure raises the EMI but cuts total interest sharply.
Things the EMI does not include
- Processing fees, insurance (car takaful, life cover) and documentation charges.
- Rate changes: most Pakistani bank loans are priced at KIBOR plus a spread and reset every 6 or 12 months, so the EMI can go up or down later.
- Flat-rate quotes: some lenders quote a “flat” rate on the original amount, which costs much more than the same reducing-balance rate. Ask which method is used.
Frequently asked questions
- How is EMI calculated?
- With the reducing-balance formula EMI = P·r·(1+r)^n / ((1+r)^n − 1), where r is the monthly interest rate and n the number of monthly payments. The calculator does this for you and also shows the yearly schedule.
- Does paying off a loan early save interest?
- Yes, because interest is charged on the outstanding balance. Check your loan agreement for prepayment or early settlement charges first.
- What interest rate should I enter for a bank loan in Pakistan?
- Use the rate in your offer letter. Floating loans are usually KIBOR plus a bank spread (for example 11% + 3% = 14%); enter the total.
- Can I use it for Islamic (Murabaha or Ijarah) financing?
- The monthly rental or instalment of most Islamic car and home financing is worked out with the same formula using the profit rate, so the result is a good estimate. Your bank's schedule is the final word.
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