Does prepayment reduce EMI or tenure?

By default, banks reduce the loan tenure after prepayment as it saves the most interest. EMI reduction can be requested separately.

Is EMI different for fixed and floating interest rates?

Yes. Fixed-rate EMIs remain constant, while floating-rate EMIs can change when interest rates change.

Can EMI change during the loan tenure?

Yes. EMI can change if interest rates change or if you make part prepayments.

Did Budget 2026 change EMI calculation rules?

No. Union Budget 2026 did not introduce any changes to EMI calculation formulas for home loans, car loans, or personal loans. EMIs are still calculated using the reducing balance method.

What is the EMI for a 20 lakh home loan?

For a ₹20 lakh home loan at 8.5% interest for 20 years, the EMI would be approximately ₹17,340 per month. The total interest paid would be around ₹21.62 lakhs over the loan tenure. Use our calculator above to get exact figures for different rates and tenures.

Which bank has the lowest home loan EMI in India?

As of February 2026, SBI offers competitive home loan rates starting from 8.50%, followed by HDFC Bank (8.60%) and Axis Bank (8.75%). However, the actual rate depends on your credit score, income, and loan amount. Always compare total cost including processing fees.

How to reduce EMI amount without changing loan tenure?

To reduce your EMI without extending tenure: 1) Make a lump sum prepayment to reduce principal, 2) Request bank to recalculate EMI on reduced balance, 3) Transfer loan to a bank with lower interest rate (balance transfer), 4) Improve credit score to negotiate rate reduction.

Is EMI calculated on reducing or flat rate?

All major Indian banks use the REDUCING BALANCE METHOD for home loans, car loans, and personal loans. This means interest is calculated only on the outstanding principal amount, which decreases with each EMI payment. Flat rate method is outdated and no longer used.

🇮🇳हिंदी में देखें (Read in Hindi)

EMI CalculatorPlan Your Loan Smartly

Use Fincado’s EMI Calculator to calculate your monthly loan EMI, total interest payable, and repayment schedule for Home Loans, Personal Loans, and Car Loans. Compare loan options, test prepayments, and plan your loan smartly before applying.

🧮Example EMI Calculation

Loan Amount (P):

₹5,00,000

Annual Interest Rate:

12% p.a.

Loan Tenure:

3 years (36 months)

Step 1: Monthly Interest Rate (r)

r = 12 ÷ (12 × 100) = 12 ÷ 1200 = 0.01

Step 2: (1 + r)ⁿ

(1 + 0.01)³⁶ ≈ 1.4308

Step 3: Apply EMI Formula

EMI = 5,00,000 × [0.01 × 1.4308] / [1.4308 − 1]

EMI = 5,00,000 × 0.014308 / 0.4308

EMI ≈ 5,00,000 × 0.033228

Monthly EMI:

₹16,607

Total Amount Payable:₹5,97,852

Total Interest Paid:₹97,852

💡Understanding the EMI Formula

EMI is calculated using the reducing balance method, the same method used by banks.
EMI stays constant, but the interest part reduces and the principal part increases over time.
You can use this formula for any loan type – home, car, personal, education, or business loans.

This EMI calculator uses the same formula that banks and NBFCs use, so your results will closely match official loan amortization schedules.

Key EMI Insights

Lower EMI often means higher total interest over time.
Even small prepayments can reduce interest by lakhs.
Tenure changes impact total repayment more than interest rate changes.
EMI calculators help compare banks before applying for loans.

Personal Loan Interest Rates 2025

Lender Category	Interest Rate (p.a.)	Processing Fee
PSU Banks (Salary Account)	10.50% — 13.00%	1% - 2%
Private Banks	10.99% — 16.00%	1.5% - 3%
NBFCs & Fintech Apps	14.00% — 24.00%	2% - 4%

Note: Rates mentioned above are indicative market ranges for borrowers with a Credit Score > 750. Actual rates may vary based on your profile.

Bank EMI Rates Comparison (Updated Feb 2026)

Bank	Home Loan Rate	Car Loan Rate	Personal Loan Rate	Processing Fee
HDFC Bank	8.60% - 9.50%	8.70% - 10.00%	10.50% - 21.00%	Up to 0.5%
SBI	8.50% - 9.65%	8.85% - 9.75%	11.15% - 14.45%	Up to 0.35%
ICICI Bank	8.75% - 9.70%	9.00% - 10.50%	10.75% - 19.00%	Up to 2.5%
Axis Bank	8.75% - 9.65%	9.25% - 11.50%	10.49% - 22.00%	Up to 2%

*Rates are indicative and subject to change. (Updated Feb 2026)

Want to master your EMI?Read our EMI Guide (Updated for 2026)

What is an EMI?

EMI (Equated Monthly Installment) is the fixed monthly amount paid towards loan repayment, consisting of principal and interest. Indian banks calculate EMI using the reducing balance method, where interest is charged only on the outstanding principal. Compare with our SIP Calculator to understand loan vs investment planning better.

How This EMI Calculator Helps

This calculator helps you budget better, compare loan offers, and reduce total interest through informed planning. Most borrowers underestimate how much interest accumulates over long tenures until they see the amortization table.

Factors That Affect Your EMI

Loan Principal: The total amount you borrow. Higher principal means higher EMI.
Interest Rate: A lower Personal Loan Interest Rate or Home Loan rate reduces your monthly burden significantly.
Tenure: Choosing a longer tenure reduces your monthly EMI but increases the total interest payout over time.

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When Should You Use an EMI Calculator?

Before applying for any loan to check affordability.
While comparing banks to find the cheapest option.
To calculate how much interest you save with prepayments.

Quick EMI Reference Guide

Approximate monthly EMI per ₹1 Lakh loan at different interest rates

5 Years @ 8.5%

₹2,052

per lakh/month

10 Years @ 8.5%

₹1,237

per lakh/month

15 Years @ 8.5%

₹984

per lakh/month

20 Years @ 8.5%

₹867

per lakh/month

Example: For a ₹25 lakh home loan at 8.5% for 20 years, your EMI would be approximately ₹21,675/month(₹867 × 25)

Frequently Asked Questions

Checking EMI using a calculator does not affect your credit score. However, missing EMI payments can negatively impact your credit score.

Fincado Research Team

Fact Checked

Our analysis is built on deep-dive research into RBI Benchmarks and lender-specific disclosures. We verify every interest rate and fee structure against real-world borrower approvals to ensure the highest level of accuracy for Indian home buyers.

Verified: Feb 2026

Methodology: Data-Driven

Editorial Guidelines

EMI CalculatorPlan Your Loan Smartly

Lender Category

Interest Rate (p.a.)

Processing Fee

PSU Banks (Salary Account)

10.50% — 13.00%

1% - 2%

Private Banks

10.99% — 16.00%

1.5% - 3%

NBFCs & Fintech Apps

14.00% — 24.00%

2% - 4%

Bank

Home Loan Rate

Car Loan Rate

Personal Loan Rate

Processing Fee

HDFC Bank

8.60% - 9.50%

8.70% - 10.00%

10.50% - 21.00%

Up to 0.5%

SBI

8.50% - 9.65%

8.85% - 9.75%

11.15% - 14.45%

Up to 0.35%

ICICI Bank

8.75% - 9.70%

9.00% - 10.50%

10.75% - 19.00%

Up to 2.5%

Axis Bank

8.75% - 9.65%

9.25% - 11.50%

10.49% - 22.00%

Up to 2%

What is an EMI?

🧮Example EMI Calculation

💡Understanding the EMI Formula

What is an EMI?

How This EMI Calculator Helps

Factors That Affect Your EMI

Related Financial Calculators

When Should You Use an EMI Calculator?

Does EMI affect credit score?

Does prepayment reduce EMI or tenure?

How do banks calculate EMI?

Is EMI different for fixed and floating interest rates?

Can EMI change during the loan tenure?

Did Budget 2026 change EMI calculation rules?

What is the EMI for a 20 lakh home loan?

Which bank has the lowest home loan EMI in India?

How to reduce EMI amount without changing loan tenure?

Is EMI calculated on reducing or flat rate?

Fincado Research Team

🧮Example EMI Calculation

💡Understanding the EMI Formula

What is an EMI?

How This EMI Calculator Helps

Factors That Affect Your EMI

Related Financial Calculators

When Should You Use an EMI Calculator?

Does EMI affect credit score?

Does prepayment reduce EMI or tenure?

How do banks calculate EMI?

Is EMI different for fixed and floating interest rates?

Can EMI change during the loan tenure?

Did Budget 2026 change EMI calculation rules?

What is the EMI for a 20 lakh home loan?

Which bank has the lowest home loan EMI in India?

How to reduce EMI amount without changing loan tenure?

Is EMI calculated on reducing or flat rate?

Fincado Research Team