There is no direct formula for the rate behind an EMI: you try rates until the EMIs repay the loan exactly, and this calculator does that for you. Example: ₹2,00,000 repaid at ₹9,700 a month for 24 months is 15.03% a year reducing (₹1.25 sekda), or 8.2% as a simple interest (flat) rate.
How to calculate the interest rate from an EMI
Banks work out the EMI from the rate with a formula, but no formula runs backwards: the rate sits inside a power on both the top and the bottom. So the rate is found by trial. Guess a rate, work out its EMI, and move the guess up or down until the EMIs repay the loan exactly. The calculator does this to many decimal places in a blink, solving the same equation as the RATE function in Excel.
Some "reverse EMI" calculators answer a different question: how big a loan an EMI can buy. This one does the other reverse: it finds the interest rate hidden in an EMI. To do the sums yourself in a spreadsheet, see the EMI formula, by hand and in Excel.
One loan, two rates: reducing and flat
Banks quote a reducing rate: interest each month on what you still owe. Most of us think in simple interest: interest on the full amount for the full time. Take ₹1,00,000 for 12 months with an EMI of ₹8,885. You repay ₹1,06,620, so the interest is ₹6,620.
- As simple interest on the full ₹1,00,000 for a year, that is 6.62% a year (₹0.55 sekda). This is the "flat" rate.
- On the money you actually had, about ₹55,155 on average because every EMI returns some of it, it is 12% a year. This is the bank's rate.
How the EMI is worked out
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
P is the loan, r the monthly rate (yearly rate ÷ 12 ÷ 100) and n the number of months. See the EMI formula worked by hand.
EMI with processing fee, GST and other charges
A processing fee is cut from the money you receive, but you still repay EMIs on the full loan. GST is charged on the fee, not on the interest. Some loans also carry insurance or documentation charges. The true rate counts everything you pay out of the loan: it is the rate at which your EMIs repay the money that actually reached you.
| Charges counted | Money in your hand | True rate a year |
|---|---|---|
| No charges | ₹5,00,000 | 10.5% |
| Processing fee ₹10,000 | ₹4,90,000 | 11.38% |
| Fee + GST at 18% | ₹4,88,200 | 11.54% |
| Fee + GST + insurance ₹5,000 | ₹4,83,200 | 11.99% |
So a loan sold at 10.5% costs 11.99% once the fee, GST and insurance are counted. GST is taken at 18% here only as an example: check the rate on your loan's Key Fact Statement and change it in the calculator. If insurance is added to the loan instead of being paid upfront, enter the full loan amount and put the premium under other charges. Open Fees taken from the loan in the calculator above to add your own.
Advance EMIs raise the real rate
Some vehicle and consumer loans collect one or two EMIs on the day the loan is paid out. You pay the same number of EMIs, but you have less money in hand from day one, so the real rate goes up.
| Advance EMIs | Money in your hand | EMIs after that | True rate a year |
|---|---|---|---|
| None | ₹2,00,000 | 24 | 15.03% |
| 1 | ₹1,90,300 | 23 | 16.42% |
| 2 | ₹1,80,600 | 22 | 18.01% |
Two advance EMIs turn 15.03% into 18.01%, with no change to the EMI. Add them to your own loan under Fees taken from the loan (EMIs paid at the start) in the calculator above.
APR and the Key Fact Statement (KFS)
Under RBI rules, banks and NBFCs must give you a Key Fact Statement before you sign a retail or MSME term loan. It shows the Annual Percentage Rate (APR): the yearly cost of the loan including the interest and all other charges. Third-party charges the lender collects, such as insurance, count too, and a fee not shown in the KFS cannot be charged without your explicit consent.
The true rate in this calculator is the same idea: every rupee you pay, counted against the money you get. It is our own calculation, though, and we don't claim it follows the exact APR method the RBI sets for the KFS. Use it to check the KFS and to compare offers on equal terms; if the two differ, ask the lender how its APR was worked out.
Got a flat rate or a no cost EMI offer instead?
If a dealer quotes a flat rate rather than an EMI, use the flat interest rate calculator: it turns the flat rate into the reducing rate (IRR) you can compare here. For shop offers sold as zero interest, the no cost EMI calculator shows what the offer really costs.
8 short answersEMI, interest rate and fees: your questions
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How do I find the interest rate from my EMI?
Choose Interest rate, then enter the loan amount, the number of EMIs and the EMI. The calculator shows the rate you are really paying (the reducing rate banks quote) and the flat rate shops often quote instead. For example, ₹2,00,000 repaid at ₹9,700 a month for 24 months costs 15.03% a year reducing, or 8.2% flat.
What is the EMI on a ₹1 lakh loan?
At 12% a year, ₹1 lakh costs ₹8,885 a month over 1 year, ₹4,707 over 2 years and ₹2,224 over 5 years. The EMI rises in step with the loan, so multiply by your lakhs. For other rates and periods, see the EMI per ₹1 lakh chart.
How do I calculate the total interest on an EMI loan?
Multiply the EMI by the number of months, then subtract the loan. ₹5,00,000 at 10.5% for 5 years has an EMI of ₹10,747: ₹10,747 × 60 = ₹6,44,820, so the interest is about ₹1,44,820. The repayment table shows how much of each EMI is interest.
Why does the calculator show two interest rates?
They divide the same interest in two ways. With ₹1,00,000 for 12 months at an EMI of ₹8,885, the ₹6,620 of interest is 12% a year of the money you actually had (the bank’s reducing rate) but 6.62% of the full loan (the flat rate). Compare loans on the reducing rate. See EMI vs simple interest.
Is the processing fee included in the EMI?
No. The EMI is worked out on the full loan; the fee is a one-time charge, often cut from the amount paid out to you, and GST is charged on it. Enter the fee, the GST and any other charges to see the true rate: ₹5,00,000 at 10.5% for 5 years with a ₹10,000 fee costs 11.38% a year on the ₹4,90,000 you actually receive.
Why is my bank’s EMI slightly different from the calculator’s?
Usually rounding or dates. For ₹1,00,000 at 12% over a year the formula gives ₹8,884.88; the bank charges ₹8,885 and adjusts the last instalment. Some lenders also count interest by the actual days in each month, or add interest for the days before your first EMI. Insurance or other charges added to the loan raise the EMI too.
How do I work out my new EMI after a rate change?
Choose EMI and enter what you still owe, the new rate and the months left. ₹5,00,000 at 10.5% for 5 years leaves about ₹4,19,747 owed after 12 EMIs; at 11.5% the EMI for the last 48 months becomes ₹10,951, up from ₹10,747. On floating-rate EMI loans for personal use, RBI rules let you choose a higher EMI, a longer term or both.
Can I repay my EMI loan early without a penalty?
Yes, if it is a floating-rate loan you took as an individual for a non-business purpose: under RBI rules, banks and NBFCs cannot charge a prepayment penalty on it, whether you repay part or all of it. A fixed-rate loan may carry a charge under the lender’s policy, so check your loan agreement or Key Fact Statement.
Every figure comes from one tested engine and is exact to the paisa. How we calculate