Enter your loan amount, interest rate, and tenure to calculate your monthly EMI, total interest, principal, and total repayment. The calculator uses the reducing balance method to show your monthly payment and overall loan cost.
What Is EMI and How Is It Calculated?
EMI stands for Equated Monthly Installment. It is the fixed amount you pay your bank every month until the loan is repaid. Each EMI has two parts: principal repayment and interest. The split changes monthly, but the total payment stays the same.
Nepal banks use the reducing balance method, where interest is charged only on the outstanding loan amount. Early installments are mostly interest; later installments are mostly principal. That is why the interest portion falls each month as you repay.
For a home loan of Rs 50,00,000 at 10% over 20 years, the EMI is Rs 48,251 per month. Total interest over the term comes to Rs 65,80,260, and total repayment is Rs 1,15,80,260. Knowing these numbers before signing matters.
EMI Formula
Nepal banks use the same formula to calculate EMI:
| Variable | Meaning | Example Value |
|---|---|---|
| P | Principal, the total loan amount | Rs 10,00,000 |
| r | Monthly interest rate (annual rate / 12 / 100) | 0.01 for 12% p.a. |
| n | Total number of monthly installments | 60 for 5 years |
| EMI | Fixed monthly payment | Rs 22,244 |
EMI = P x r x (1+r)^n / ((1+r)^n - 1).
Convert the annual rate to a monthly rate by dividing by 12 and then by 100. For 12%, the monthly rate is 12 / 12 / 100 = 0.01. Convert tenure to months by multiplying years by 12: five years becomes 60 months. The formula then returns the fixed monthly payment that clears the loan over that tenure.
How to Use the EMI Calculator
Follow these steps to calculate EMI for any loan.
- Enter the loan amount in NPR. This is the total you plan to borrow.
- Enter the annual interest rate your bank quoted, including the base rate and spread.
- Select the loan tenure in years or months.
- Click Calculate EMI to see monthly EMI, total interest, total principal, and total payment.
Use the calculator before applying. Compare tenures to see how the monthly payment and total interest change. A longer tenure lowers your EMI but raises total interest. A shorter tenure raises your EMI but saves on interest. You can use this calculator for any loan type, including home, car, personal, education, and business loans, because they all use the same reducing balance formula.
EMI Example Table (Rs 10 Lakh at 12% for 5 Years)
This table shows how the principal and interest split changes for a Rs 10,00,000 loan at 12% for 5 years (60 months). The monthly EMI is Rs 22,244.
| Period | EMI | Principal Paid | Interest Paid | Remaining Balance |
|---|---|---|---|---|
| Month 1 | Rs 22,244 | Rs 12,244 | Rs 10,000 | Rs 9,87,756 |
| Month 6 | Rs 22,244 | Rs 12,869 | Rs 9,375 | Rs 9,24,672 |
| Month 12 | Rs 22,244 | Rs 13,661 | Rs 8,584 | Rs 8,44,710 |
| Month 24 | Rs 22,244 | Rs 15,393 | Rs 6,851 | Rs 6,69,725 |
| Month 36 | Rs 22,244 | Rs 17,346 | Rs 4,899 | Rs 4,72,547 |
| Month 48 | Rs 22,244 | Rs 19,545 | Rs 2,699 | Rs 2,50,363 |
| Month 60 | Rs 22,244 | Rs 22,024 | Rs 220 | Rs 0 |
In month one, interest is Rs 10,000 and principal is Rs 12,244. In month six, interest is Rs 9,375 and principal is Rs 12,869. By month 60, interest drops to Rs 220 and principal rises to Rs 22,024. The interest portion falls each month because the balance decreases. Total interest over 5 years is Rs 3,34,667. Total repayment is Rs 13,34,667.
Flat Rate vs Reducing Balance
Nepal banks use the reducing balance method. Some lenders, including cooperatives, quote flat rates. The difference in total cost is significant.
| Feature | Flat Rate | Reducing Balance |
|---|---|---|
| Interest calculated on | Original principal for full tenure | Outstanding balance each month |
| Monthly interest amount | Same every month | Decreases over time |
| Total interest on Rs 10 lakh at 12% for 5 years | Rs 6,00,000 | Rs 3,34,667 |
| Effective cost | Much higher than quoted rate | Matches quoted rate |
| Used by | Some cooperatives, hire purchase | Nepal commercial banks (NRB requirement) |
As a rule of thumb, a flat rate of 8% over 5 years costs about the same as a reducing balance rate of 14.1%. A flat 10% is close to reducing balance 17.3%, and a flat 12% is roughly a reducing balance 20.3%. Always confirm which method your lender uses. If a lender quotes a flat rate, ask for the reducing balance equivalent before comparing. Nepal Rastra Bank requires the reducing balance method for commercial banks. Cooperatives and informal lenders may use flat rates.
Factors That Affect Your EMI
Three main factors determine your EMI amount.
Loan amount. Higher principal means higher EMI. A Rs 20,00,000 loan at 12% for 5 years gives an EMI of Rs 44,489. A Rs 10,00,000 loan under the same conditions gives Rs 22,244. The EMI doubles because the principal doubles.
Interest rate. Higher rates increase both EMI and total interest. At 10% for Rs 10 lakh over 5 years, the EMI is Rs 21,247. At 14%, it rises to Rs 23,268. The difference in total interest is Rs 1,21,272 over 5 years. Even a 1% rate change affects your payment.
Loan tenure. Longer tenure lowers EMI but raises total interest. For Rs 10 lakh at 12%, a 3-year tenure gives an EMI of Rs 33,214 with total interest of Rs 1,95,715. A 7-year tenure gives an EMI of Rs 17,653 with total interest of Rs 4,82,830. The EMI drops by nearly half, but total interest more than doubles.
Your debt-to-income ratio also matters. Nepal banks commonly cap EMI at 50% to 60% of monthly income. A bank checks this before approving your loan. Use the calculator to find an EMI that fits your budget before you apply.
Loan Tenures by Loan Type
Maximum tenures vary by product. Home loans go up to 25 years. Vehicle loans go up to 7 years. Personal loans go up to 5 years. Education loans go up to 10 to 15 years. This calculator supports tenures up to 50 years, so you can model long-term options.
Use this EMI Calculator alongside other SajiloX tools. Check your compound interest with the Chakriya Byaj Calculator. Estimate your property loan with the Home Loan EMI Calculator. Convert Nepali dates with the Nepali Date Converter and find your age with the Nepali Age Calculator. All tools are free and need no signup.
Last verified: August 2026. EMI figures and flat-to-reducing equivalents cross-checked against the standard reducing balance formula.