What is a reducing balance EMI?

Reducing balance means the interest is calculated only on the remaining loan principal. As you pay your EMI, the principal decreases, so the interest portion of your EMI decreases over time.

Do Nepali banks use this exact EMI formula?

Yes, almost all commercial (Class A) and development (Class B) banks in Nepal use this exact reducing-balance EMI mathematical formula.

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EMI / Loan Calculator

Calculate monthly EMI, total interest, and total payment. Useful for bank loans, education loans, and bike/car loans.

Loan Amount (NPR)

Annual Interest Rate (%)

Tenure (Years)

Tenure (Months)

You can use Years OR Months or both.

Show amortization (first 12 months)

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Nepal Bank EMI Loan Calculator

Taking out a home loan, vehicle loan, or personal loan in Nepal? Knowing your exact Equated Monthly Installment (EMI) is crucial before signing any banking documents. Our EMI Calculator uses the standard reducing balance formula officially used by commercial banks in Nepal (like Nabil Bank, NIC Asia, Global IME, etc.).

The Technical EMI Formula

The mathematical formula for calculating your EMI is:
E = P × r × (1 + r)^n / ((1 + r)^n - 1)

Where:
P = Principal loan amount
r = Monthly interest rate (Annual Rate / 12 / 100)
n = Loan duration in total months

By tweaking the interest rate and tenure in our tool, you can see how much total interest you'll be paying over the life of the loan. This helps you decide the best loan term to minimize the extra money you lose to the bank!