# EMI Calculator

EMI calculator is one of the best financial planning tools that will help you in calculating the monthly amount payable to the lender against the loan borrowed. All you need to do is enter the amount of EMI that you can pay every month, the interest rate offered by your lender and the preferred tenure.

### The basic formula that works in calculating EMI is as follows:

E = P x r x (1+r)^n/((1+r)^n – 1 E is the amount that you need to pay as an EMI P is the principal amount that you want to borrow. R is the rate of interest that is applicable but calculated every month instead of the annual rate of interest. It is obtained by using the formula r = (annual interest/12) x 100. n is the duration of the loan in terms of months. So, if you select a term of 3 years, n will be 45. It is the most common formula used to calculate an EMI; however, another factor is also taken into consideration at the time of using this formula is the processing fee for the loan. This fee will generally be a certain percentage of the amount being borrowed which falls in the range from 1% to 3%. This range is to be decided by the bank and it is not the same for every financial institution.

### How to calculate EMI using Excel?

All you need to do is use the PMT function to calculate your monthly installments. The syntax for the excel function is: PMT (rate, nper, pv) Here, pv = The principal amount or the present value rate = The fixed rate of interest at which the loan is borrowed nper = The number of payments to be made to repay the entire debt

## What are the components of EMI Calculator?

EMI calculation provides information in three parts. The first is the EMI itself, the second a breakup of the payments due and the third the amortisation table.

### The EMI

Equated Monthly Instalment or EMI is the fixed amount a borrower pays every month towards the repayment of their loan. It has two components - the principal and the interest- and is usually paid on a fixed date every month.

### The breakup

EMI can be broken down into two components - interest and principal. During the initial years of loan tenure, it is mainly the interest payments that are being made while the principal repayments are much less. Towards the end of the repayment tenure, a bulk of the repayment is made towards the principal component.

### Amortization tables

A Loan Amortization table keeps track of this EMI breakup, so you know exactly what portion of your EMI has been used for paying interest and what is used to reduce the principal. This schedule can be very helpful in understanding the procedure of pre-payment of loans and refinancing if required.

## Different types of EMI Calculator:

### Personal Loan EMI Calculator

It is one of the best financial tools available for a borrower who is willing to apply for a personal loan. When you make use of personal loan EMI Calculator, you need to provide information related to your current organization, total work experience, tenure, etc to calculate your loan eligibility.

### Home Loan EMI Calculator

Using a Home Loan calculator will help you to know how much EMI you need to pay for a loan amount which you are planning to take for buying a home so that you can manage your finances most efficiently.

### Car Loan EMI Calculator

Before you buy your dream car on a loan, always check your EMI using a car loan EMI calculator. It is the best way to know about monthly instalments with a detailed loan repayment table providing you with details such as the principal and interest amount to be paid and the outstanding balance after payment of the instalment. The down payment that you pay for your car loan will not be considered for calculating your car loan equated monthly instalments.

### Loan against property EMI Calculator

You can use your property to get funding for your financial needs. An EMI calculator for a loan against property will take into consideration factors such as loan amount, rate of interest, loan tenure, etc.

### Simple-interest loan EMI Calculator

A simple interest loan EMI calculator helps you in calculating the simple interest on a given loan amount for a specified loan tenure at the applied rate of interest. The tool is simple and easy to use. All you must do is input the borrowed amount, the loan tenure, and the simple interest rate into the tool. Click on the ‘Calculate’ button to get instant and accurate results.

### Business loan EMI Calculator

Business loans like any other type of loans are repaid through equated monthly installments over a specified period. Carrying out manual EMI calculations can be time-consuming and prone to human errors. Therefore, it is wise to use an online business loan EMI calculator that is available on the bank website or a reliable third-party website. The tool can be used any number of times for free. It is not only simple and easy to use but also instant and accurate in terms of results.

## Factors that have an impact on your EMI payments

### When the interest rate on the loan changes

If you have availed a loan on a fixed rate of interest, then there will be no impact on EMI throughout the entire loan tenure. In the case of floating interest rate, your applicable ROI is subjected to change based on their ongoing repo rate as per Reserve Bank of India. In such a scenario, EMI will be impacted.

### When the loan is partially repaid

Almost every financial institution allows the customer to avail of the benefit of making a lump sum prepayment towards their loans. Once you make a loan pre-payment, the principal amount goes down. This, in turn, helps in reducing the outstanding debt that you will have to repay. It results on declining of EMI of your loan. There are some additional charges also levied by a financial institution on the borrower to avail of this benefit. So always check the terms and conditions of the loan prepayment facility offered by the lender.

### Change in tenure

In case you make a loan transfer, there is a possibility that tenure may change according to a loan offer of another bank. This will have a direct impact on your EMI. An increase in tenure leads to a decrease in EMI and vice-versa. Therefore, a change in loan tenure should be done only with a thorough understanding of the aftereffects.

### When you choose an option of flexible EMIs

When you select the option of a flexible EMI scheme, you get the advantage of paying EMI as per your affordability. In this step-up plan, the EMI amount keeps on increases as the term of the loan progresses to stay in pace with your increasing salary. This scheme works well for the section of society who are at the entry-level of their careers. On the other hand, in case a person chooses a step-down EMI plan, the amount of EMI that he or she must pay will decrease with time. This scheme is helpful for people who are close to their retirements.

## What are the advantages of using an EMI calculator?

It is wise to always check your repayment capacity before you apply for a loan. It is the best way to let your budget to make pay EMIs on time. Main advantages of using EMI calculator includes:

### Accessibility:

You can use the EMI Calculator anytime, anywhere and make your budget calculations.

### Accuracy:

Using an EMI Calculator is more accurate than calculating the numbers yourself.

### Financial Planning:

As explained above, EMI calculations need to be done even before you file your loan application to manage your finances most efficiently. Easy comparison of loan offers: This EMI calculator helps in easy comparison of loan offers from various banks. As a result, it will show you the total cost of each loan along with their respective EMIs. This will help you narrow down on the most feasible option.