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About the EMI in Advance vs Arrears Calculator
Most Indian loans are repaid in arrears — the first EMI falls due a month after disbursal. Some vehicle and consumer loans are structured in advance, with the first instalment collected at disbursal itself.
An advance EMI is arithmetically smaller, because every payment arrives a month earlier and therefore attracts a month less interest. The saving is real but modest, and it comes at the cost of receiving less cash on day one.
The formula
This is the annuity-due adjustment: paying at the start of each period rather than the end.
Things worth knowing
Frequently asked questions
The instalment is paid at the beginning of each period rather than the end, so the first one is collected at disbursal. Each payment therefore attracts one month less interest.
It is slightly cheaper in total, but you receive less cash at disbursal. Compare the rate first — that difference dwarfs this one.
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