Three Indian EMI calculators, three different answers

Last year I was comparing two home loan offers and did what anyone does — opened a few EMI calculators and typed the same numbers into each. ₹50,00,000, 8.5%, 20 years.

I got three different answers.

Not wildly different. The spread was a few hundred rupees a month. But across 240 instalments a few hundred rupees is a few lakh, and worse, I had no way to tell which one was right. None of them showed their working.

Where the divergence comes from

The formula itself is not controversial:

EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1)

P is the principal and n the number of months. The disagreement is always r, the monthly rate. Given a quoted 8.5% a year, is it:

  • 0.085 ÷ 12 = 0.00708333… — simple division, which is what Indian lenders actually use, or
  • (1.085)^(1/12) − 1 = 0.00681… — the true compounded equivalent?

Both are defensible arithmetic. Only the first matches your sanction letter, because Indian lenders quote a nominal annual rate and compound monthly. A calculator using the second is not broken — it is answering a different question — but it will tell you the EMI is about ₹1,000 a month lower than you will actually pay.

Rounding does the rest. Round the monthly rate before multiplying and the EMI shifts by a rupee or two. Round the EMI itself to the nearest rupee, as every lender does, and the final instalment has to absorb the accumulated difference. Drop that adjustment and the amortisation table stops summing to the principal you borrowed.

The number that should actually change your decision

On ₹50,00,000 at 8.5% for 20 years the EMI is ₹43,391. That is the figure every calculator puts in bold, and it is the least useful one on the page.

Here is the useful one. In the first month, ₹35,417 of that instalment is interest. Only ₹7,974 goes to principal — under a fifth of what you paid.

Across the whole of year one you pay ₹4,21,182 in interest and repay ₹99,511 of principal. Twelve payments totalling ₹5.2 lakh, and the ₹50 lakh debt has come down by under two percent.

Nobody comparing a 20-year loan against a 15-year one, or deciding whether a prepayment in year three is worth it, can do that from the EMI alone. They need the schedule.

What I built instead

EMICalcs has a home loan calculator that uses the nominal-rate convention Indian lenders actually use, shows the amortisation schedule year by year, and exports it to CSV so you can reconcile it against your own sanction letter. For car and personal loans — where the tenure and rate differ but the arithmetic does not — there is a general loan EMI calculator.

Both are free, need no signup, and every result has its own URL, so you can send one exact scenario to your spouse or your CA and they see precisely the inputs you used.

Every figure in this post came out of that calculator rather than a spreadsheet. That is the subject of the next post: why arithmetic taught in school still needs 159 automated tests.

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