What is an EMI Calculator?
An EMI (Equated Monthly Installment) calculator helps you estimate the monthly payment you need to make to repay your loan. It is a quick and accurate way to plan your finances before taking a loan.
How is EMI Calculated?
Formula:
EMI = [P × R × (1+R)N] / [(1+R)N - 1]
- P = Principal loan amount
- R = Monthly interest rate (annual rate / 12 / 100)
- N = Number of monthly installments (loan tenure in months)
Example Calculation
Suppose you take a loan of ₹5,00,000 at an annual interest rate of 8% for 5 years:
- P = ₹5,00,000
- R = 8% / 12 / 100 = 0.00667
- N = 5 × 12 = 60
Calculation:
EMI = [5,00,000 × 0.00667 × (1+0.00667)60] / [(1+0.00667)60 - 1] ≈ ₹10,133.06
Total Payment: ₹10,133.06 × 60 = ₹6,07,983.60
Total Interest: ₹6,07,983.60 - ₹5,00,000 = ₹1,07,983.60
Factors Affecting Your EMI
- Loan Amount: Higher loan amounts increase your EMI.
- Interest Rate: Higher rates increase your EMI.
- Loan Tenure: Longer tenure reduces EMI but increases total interest paid.
Advantages of Using an EMI Calculator
- Instant and accurate EMI calculation
- Helps you plan your finances better
- Eliminates manual calculation errors
- Easy to compare different loan options