Your EMI or Equated Monthly Installment consists of a portion of principal amount as well as interest payment on the loan. The EMI amount on your loan depends on the principal amount, the loan tenure, and the rate of interest.moneyview follows the reducing balance method for interest calculation. Given below is an example to illustrate the same.Suppose you avail a loan for Rs 50,000 for a term of 6 months at an interest rate of 16%, your repayment schedule will be as given in the table below. Your outstanding loan amount reduces with payment of each EMI, which is why this method is called the reducing balance method for interest calculation.