EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), where P is the loan, r is the annual rate ÷ 12 ÷ 100 and n is the number of months. A Rs 20 lakh loan at 10% for 10 years costs Rs 26,430.15 a month and Rs 11,71,617 in interest overall; most Nepali bank loans float with the bank's base rate, so the EMI can change.
Enter the amount, rate and tenure in the free EMI calculator to see the monthly instalment, total interest and the full repayment schedule.
What is an EMI?
An EMI (equated monthly instalment) is the fixed amount you pay every month until a loan is repaid. Each instalment has two parts: interest on the balance still owed, and principal that reduces the balance. Early on most of the EMI is interest; towards the end most of it is principal. This is the reducing-balance method, and it is what the EMI calculator uses.
What is the EMI formula?
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- P — the loan amount (principal)
- r — the monthly interest rate: annual rate ÷ 12 ÷ 100
- n — the number of monthly instalments
If the rate is 0%, the EMI is simply P ÷ n.
Worked example: Rs 20 lakh at 10% for 10 years
The first instalment splits like this:
| Month 1 | Amount |
|---|---|
| Interest (Rs 20,00,000 × 0.008333) | Rs 16,666.67 |
| Principal (EMI − interest) | Rs 9,763.48 |
| Balance after the payment | Rs 19,90,236.52 |
In the whole first year you pay about Rs 1,94,478 of interest and only Rs 1,22,684 of principal.
How do the rate and tenure change the EMI?
Same Rs 20 lakh loan:
| Rate | Tenure | EMI | Total interest |
|---|---|---|---|
| 9% | 10 years | Rs 25,335.15 | Rs 10,40,219 |
| 10% | 10 years | Rs 26,430.15 | Rs 11,71,617 |
| 11% | 10 years | Rs 27,550.00 | Rs 13,06,001 |
| 10% | 5 years | Rs 42,494.09 | Rs 5,49,645 |
| 10% | 15 years | Rs 21,492.10 | Rs 18,68,579 |
Two things stand out:
- One percentage point moves the EMI by about Rs 1,100 a month here, and total interest by around Rs 1.3 lakh.
- A longer tenure lowers the EMI, but stretching from 10 to 15 years costs about Rs 7 lakh more in interest.
Does prepaying a loan help?
Yes — any extra principal you repay stops earning interest for the bank. Take the Rs 20 lakh, 10%, 10-year loan above. After 24 instalments the balance is Rs 17,41,786. You then pay an extra Rs 2,00,000:
| After prepaying Rs 2 lakh | EMI | Remaining interest |
|---|---|---|
| No prepayment | Rs 26,430.15 for 96 months | Rs 7,95,508 |
| Keep the same EMI | Rs 26,430.15 for 81 months | Rs 5,78,571 |
| Keep the same end date | Rs 23,395.31 for 96 months | Rs 7,04,164 |
Keeping the EMI and shortening the tenure saves the most — about Rs 2.17 lakh here, against about Rs 91,000 if you lower the EMI instead. Some banks charge a prepayment or swap fee, so read your loan agreement first.
Frequently asked questions
How is EMI calculated for a home loan in Nepal?
With the same reducing-balance formula: EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1), using the monthly rate and the number of months. A Rs 50 lakh home loan at 9% for 20 years works out to about Rs 44,986 a month.
Why did my EMI change when I didn't change my loan?
Most loans in Nepal float with the bank's base rate. When the bank revises its base rate, your interest rate (base rate plus your premium) changes too, and the bank adjusts the EMI or the remaining tenure.
Is a lower EMI always better?
Not necessarily. A lower EMI usually comes from a longer tenure, which means paying interest for more months. On Rs 20 lakh at 10%, a 15-year term lowers the EMI by about Rs 4,900 compared with 10 years but adds about Rs 7 lakh of interest.