# EMI Calculator

LOAN AMOUNT
INTEREST RATE
LOAN TERM (Years)

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## EMI CALCULATION FORMULA

The interest rate, the loan tenure, and the principal amount, in combination, give a simple formula for EMI calculation. The EMI calculation formula is:

EMI = [P x R x (1+R) ^N]/ [(1+R) ^ (N-1)], where –

P = principal amount

R = rate of interest

N = loan tenure

## USES OF EMI CALCULATOR

The uses of EMI Calculator are:

• Assists in obtaining an accurate estimate of the EMI amount to plan the monthly budget accordingly
• Time can be saved by using an EMI calculator as no calculations are done manually
• Eliminates the possibility of calculation errors

## HOW TO USE AN EMI CALCULATOR?

The easy EMI calculator has been created in such a way that anyone can use it. To calculate your monthly EMI payments, you don't need to learn any complicated formulae. It is simple to use, intuitive to understand, and quick to perform, with colorful charts and instant results. In the EMI Calculator, you will have to enter the following information:

• The principal amount of the loan
• Term of the loan (months or years)
• Applicable interest rates (percentage)

You can either adjust the values with sliders or type the values directly in the relevant boxes provided to enter more precise values. The EMI calculator will recalculate your monthly payment (EMI) amount when the values are changed.

There's also a pie chart showing the breakdown of total payment (total principal vs genuine interest payable). In all charges made against the loan, the EMI interest calculator shows the genuine interest versus principal percentage.

## EXAMPLE OF EMI CALCULATION

To understand the use of EMI calculation better, let us take an example. Assume a person applies for a home loan of Rs.1 crore for a time period of 20 years at an interest rate of 8%.

So here, R= 8%/12 = 0.00666667

EMI= [10000000*0.00666667*(1+0.00666667)240 / [(1+0.00666667)240 -1] = 83644

In this case, the monthly EMI payment for the borrower would be Rs.83,644. Therefore, the total amount payable in interest would be Rs.1,00,74,544, and the total amount due would be Rs.2,00,74,560.

## TYPES OF EMI CALCULATORS

There are different types of EMI Calculators like:

### Personal Loan EMI calculator

Personal Loan is the most popular type of credit availed. The reason being it has no-end use restrictions. Whether it is funding a medical treatment, house repair, or taking an overdue family vacation, the loan allows you to meet all your financial requirements hassle-free. Personal Loan EMI calculator is an online calculator that comes in handy to determine your eligibility and plan your repayment. All you need to do is enter a few key variables and the calculator will provide you with accurate results in no time.

### Education Loan EMI calculator

Pursuing higher education is always a boon for your career. Thanks to Education Loans you can pursue this dream. The loan can be availed at a competitive interest rate and repaid easily once the moratorium period is complete. If you are wondering what the loan repayment EMI will be, use an Education Loan EMI calculator to determine it. The EMI calculator is readily accessible on every bank’s website and can be used free of charge.

### Car Loan EMI calculator

If you have been wanting to buy a car for a while now, head to the showroom today and book your favourite car! Do not forget to plan your repayment before doing so. Planning your Car Loan repayment ensures you are able to clear your loan and drive your car worry-free. Car Loan EMI calculator is a useful online tool that helps you plan your Loan repayment. It provides an estimated idea of the EMI payable, giving you chance to understand your affordability status and plan other finances accordingly.

### Home Loan EMI calculator

A home is one of the most valuable investments you make in your life. It requires huge capital and if you opt for a home loan, the principal amount is also high. It is necessary for you to plan your home purchase strategically. A Home Loan EMI calculator helps you do so. The calculator helps determine the maximum loan amount you can avail and subsequently plan its repayment.

### Loan against property EMI calculator

A loan against property is a secured loan you can get to meet your financial requirements. You can receive a significant loan amount at an attractive interest rate. Use a loan against property EMI calculator to determine the EMI payable. Knowing the EMI payable is necessary and advantageous as you know the certain amount to keep aside every month for repayment to observe good control over your spending.

## FACTORS INFLUENCING EMI AMOUNT

A number of factors influence the EMI payable; the most important ones are:

Loan amount

The total loan amount is a significant factor that determines every EMI you pay. Given this, a higher loan amount can translate into a higher EMI payable. Consider your financial requirement and affordability to determine a suitable loan amount.

Interest rate

Interest rate is the amount charged by the bank for offering you the loan amount. You repay a part of the interest with every EMI. Hence, the interest rate charged impacts your EMI payable significantly. Typically, the EMI’s interest component is higher in the initial period of the tenure. It reduces as you start repaying the principal loan amount.

The interest rate offering differs for each bank. It is also dependent on your financial profile. Explore the market to find the best interest rate offerings and keep up with a solid financial profile.

Repayment tenure

The repayment tenure or the term of the loan also influences your EMI amount. Choose a repayment tenure considering your risk appetite and convenience. Make timely payments to ensure you are able to repay the taken loan amount without feeling burdened and costing your credit score.

## BENEFITS OF EMI CALCULATOR ONLINE

• Accessibility: EMI calculator can be used at any time, from any location and multiple times
• Simple and time-efficient: By calculating EMI online, you can save time and complete all of the lengthy and tedious calculations in seconds
• Accuracy: When performing calculations manually, you run the risk of making a mistake. With a single click, the online EMI calculator assists you in making error-free calculations.
• Helpful in the process of financial planning: When you calculate an EMI for a loan, you can see how much money you'll have to pay back if you take out a loan for a certain amount, term, and interest rate. That enables you to plan your finances before taking out the loan, ensuring that the loan you take is well within your monthly budget.
• Single EMI calculator for every type of loan: You can use EMI calculators for each type of loan, such as a car loan, home loan, or student loan. Even though the parameters for each loan are essentially the same, there may be times when you need to use loan-specific EMI calculators.
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## FAQs on EMI CALCULATOR

The 'Equated Monthly Installment,' or EMI, is the amount you need to pay to the bank or financial institution on a pre-set date each month until the loan amount, including interest, is fully repaid. The principal and interest components of the EMI are designed so that the interest component is considerably more significant than the principal component in the early part of your loan. In comparison, the main element is more critical in the latter part of the loan tenure.

There are two methods for calculating an EMI, namely-

• Flat-rate method:

In this case, even though the loan balance is gradually being paid down, each interest charge is calculated using the original loan amount in the flat-rate method. The EMI is calculated by adding the total loan principal and total interest on the principal, dividing the sum by the number of EMI payments, the number of months in the loan term.

• Reducing-balance method:

The interest payment is calculated using the reducing balance method, which is based on the outstanding principal. It means that each EMI's interest and principal repayment portions change over time. Interest payments make up a larger portion of the EMI at the beginning of the loan term, as a percentage of the loan outstanding. The interest amount decreases as the loan is gradually repaid over time.

The online EMI calculator can be used to calculate EMIs for various loans, including personal loans, business loans, and car loans. All you need to know is the applicable interest rate on loan and the tenure of the loan.

An Equated Monthly Instalment contains a portion of the principal and interest due on your loan. It must be paid until the end of the term.

If you skip your EMI, your credit score will be negatively impacted, and The lender bank or financial institution may levy late fees and penalties.

The EMI can change during repayment tenure if you make a lump sum part payment towards the loan. This payment may either reduce the repayment tenure or the EMI amount.

No cost EMI means you don't have to pay any additional interest on the loan taken. As a result, you only have to pay the product's actual price through EMIs

Missed EMIs are divided into two groups-

a)       Major default:

These, as the name implies, are subject to the harshest penalties. If you have not made any payments in the last 90 days or more, it is considered a major default. It will appear on your credit report and may have an impact on future loans.

b)      Minor default:

If the last payment was made within 90 days or less, the missed EMI is considered a minor default. Borrowers who have minor defaults on their loan accounts can avoid the negative consequences if they act quickly enough.

An EMI calculator helps the borrowers know the monthly amount they are obliged to pay to their financial institution against the availed loan.

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