Free loan EMI calculator with reducing-balance compounding. Calculate monthly EMI, total interest, and year-by-year amortization schedule with downloadable PDF report.
Equated Monthly Instalment (EMI) uses the reducing-balance method where interest is computed only on the outstanding principal each month.
In the early years of a home loan, up to 75% of your EMI goes toward interest rather than principal reduction.
Under Section 24(b) of the Income Tax Act (Old Regime), home loan interest deduction is available up to ₹2,00,000 annually.
Under Section 80C, principal repayment on home loans is deductible up to ₹1,50,000 per financial year.
Avani Business OS automates employee loan advances, salary deductions, and amortization tracking directly within payroll.
Loan EMI is calculated using the standard mathematical formula: EMI = [P × r × (1+r)ⁿ] ÷ [(1+r)ⁿ − 1], where P is Principal loan amount, r is the monthly interest rate (annual interest rate divided by 12 and by 100), and n is the loan tenure in months. Each EMI payment consists of both principal repayment and interest charges.
In a reducing balance loan, interest is calculated on the remaining balance of the principal at the end of each monthly cycle, rather than on the original loan amount. As you pay each EMI, the principal decreases, which in turn reduces the interest charged in subsequent months.
Yes, under the Old Tax Regime in India: (1) Principal repayment is deductible under Section 80C up to ₹1.5 lakh per year. (2) Interest paid is deductible under Section 24(b) up to ₹2 lakh per year for self-occupied properties. Note that under the default New Tax Regime (115BAC), these deductions are not available for self-occupied homes.
A longer tenure reduces your monthly EMI amount, making the loan easier on your monthly cash flow. However, it significantly increases the total interest paid over the life of the loan. For example, a ₹25 lakh loan at 8.5% over 20 years incurs ₹26.8 lakh in interest, whereas the same loan over 10 years incurs only ₹12.1 lakh in interest.
Avani Business OS allows employers to set up staff loans and salary advances with automated monthly EMI deductions directly from payslips, complete with interest calculation, ledger schedules, and full & final settlement balance recovery.
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