How to compare two loan EMIs fairly
Use a worked loan example to understand instalments, interest and missing charges.
An EMI is the fixed monthly instalment for a loan with a stated principal, rate and tenure. A smaller monthly payment is not automatically a cheaper loan: extending the term can increase the total interest paid.
A worked example
For a ₹1,00,000 loan at 12% annual interest over 12 months, the monthly rate is 1%. A standard reducing-balance calculation gives an EMI of about ₹8,885, total payments of about ₹1,06,619, and interest of about ₹6,619. The displayed monthly amount is rounded, so multiplying the rounded figure may differ slightly from the calculator's internal total.
Enter these values in the EMI Calculator. The schedule shows that the first month charges ₹1,000 interest on the full ₹1,00,000 balance. The rest of that month's EMI reduces the principal. In later months the balance is lower, so the interest portion usually falls and the principal portion rises.
Compare offers on the same basis
- Use the same loan amount for both offers.
- Enter each offer's annual interest rate and exact term.
- Compare total interest and total payable, not just the EMI. A longer term often feels easier month to month but costs more overall.
- Add processing fees, insurance, taxes and any other lender charges separately. This calculator does not include them.
The calculator assumes a fixed annual rate converted into monthly interest and regular monthly payments. A floating rate, introductory rate, irregular repayment schedule or prepayment changes the real cost. Ask the lender for its repayment schedule and the full contractual cost before making a decision.
When the numbers disagree
Check whether the lender quotes a flat rate or a reducing-balance rate; they are not interchangeable. Verify whether the first payment is due after one full month, and whether fees are added to the loan or paid separately. Small rounding differences are normal, but a large difference needs an explanation from the lender.