EMI Calculator

EMI (Equated Monthly Installment) calculator is an important financial tool that helps in calculating the monthly installments of the loan. This calculator is extremely useful for those who are planning monthly repayments for different types of loans like home loans, personal loan, auto loan etc. In this article, we will understand the uses of EMI calculator, result facts, formulas, and methods of using EMI calculator in detail.

What is EMI calculator?

EMI calculator is an online tool that helps users to calculate the monthly installments of their loan. This helps you know how much amount you have to pay every month, making your financial planning and budgeting easier.

Uses of EMI Calculator

The following are the major uses of EMI calculator:

1. Calculation of Monthly Installments: This calculator accurately calculates the monthly installments of your loan, allowing you to better manage your financial situation.

2. Financial Planning: Using the EMI calculator, you can compare different loan options and choose the loan that best suits your budget and requirements.

3. Effect of interest rate and tenure: This calculator helps you understand how changes in the interest rate and loan tenure impact your monthly instalments.

4. Prepayment Plan: Using an EMI calculator, you can calculate how your monthly installments will be affected if you repay part of the loan earlier.

EMI calculator formula

The following formula is used to calculate EMI:

EMI=P×r×(1+r)n(1+r)n−1EMI = \frac{P \times r \times (1 + r)^n}{(1 + r)^n – 1}EMI=(1+r)n−1P×r×(1+r)n

Where:

• EMIEMIEMI = Monthly Installment

• PPP = Loan Amount (Principal)

• rrr = monthly interest rate (annual interest rate / 12 / 100)

• nnn = Loan tenure (number of monthly installments)

How to use EMI calculator

Using the EMI calculator is very simple. Follow the steps given below:

1. Enter loan amount: First, enter the amount you want to take as a loan.

2. Enter interest rate: Enter the annual interest rate. This rate is provided by your lender.

3. Enter the loan tenure: Enter the time period for which you want to take the loan. This period usually lasts for months.

4. Calculate: After entering the input data, click the ‘Calculate’ button on the calculator. With this you will get information about your monthly EMI.

result facts

The results of the EMI calculator clearly present the following facts:

1. Monthly EMI: This is the amount you have to pay every month to repay the loan.

2. Total Interest: This is the total amount of interest that you will have to pay during the loan tenure.

3. Total payment: This is the total amount you have to repay by the end of the loan tenure, including both principal and interest.

Example

Suppose you have taken a loan of Rs 5 lakh, the annual interest rate is 10%, and the loan tenure is 5 years (60 months). EMI will be calculated as follows:

• Loan amount (PPP) = Rs 5,00,000

• Annual interest rate = 10% = 0.10

• Monthly Interest Rate (RRR) = 0.10 / 12 = 0.00833

• Loan tenure (nnn) = 5 * 12 = 60 months

By using the formula:

EMI=500000×0.00833×(1+0.00833)60(1+0.00833)60−1EMI = \frac{500000 \times 0.00833 \times (1 + 0.00833)^{60}}{(1 + 0.00833)^{60} – 1}EMI=(1+0.00833)60−1500000×0.00833×(1+0.00833)60 EMI≈500000×0.00833×1.7171.717−1EMI \approx \frac{500000 \times 0.00833 \times 1.717}{1.717 – 1}EMI≈1.717−1500000×0.00833×1.717 EMI≈7154.850.717EMI \approx \frac{7154.85}{0.717}EMI≈0.7177154.85 EMI≈9971.57EMI \approx 9971.57EMI≈9971.57

So, your monthly EMI will be around Rs 9971.57.

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