EMI Calculator

What is an EMI?

A loan is a financial agreement between two parties, a lender and a borrower. Under this agreement, the lender gives a specific amount of money to the borrower with the intent that the amount borrowed is paid back with interest as monthly installments over a predetermined period of time by the borrower. Using an EMI calculator is the easiest way to determine your monthly payouts and balance your budget accordingly. Everyone has to borrow a loan at some point in time in their life whether for buying a car or a house, funding their child’s education or consolidating debts, etc. Thus, loans have become an important part of everyone's life in today’s times. Loans can be availed for various purposes, but the key components on loans are always the same, namely - loan amount, loan tenure and interest rates.
 

What is a Loan EMI Calculator?

EMI is the payment which the borrower makes every month towards loan repayment of the loan. EMI constitutes the principal amount along with the accrued interest. You can use the EMI calculator to calculate your monthly loan EMI payouts. The borrower just needs to enter the variables of the loan such as the principal amount, tenure and interest rate and it instantly fetches an result which is the EMI. Calculating EMI using the online EMI calculator is easy and you get to know your loan EMI in seconds. Paisabazaar’s online loan EMI calculators are available 24*7 without any cost! So calculate or compare various loan EMIs any number of times you wish to, for free.
 

Whenever we talk about loans, one of the first thing that crosses the mind is EMI. The abbreviation, EMI stands for Equated Monthly Installment. An equated monthly installment (EMI) is the amount that a loan borrower pays every month in order to repay the money borrowed. There is a particular date each calendar month by which the EMI should be paid by the borrower. The loan amount plus the accrued interest is divided equally over a period which is the loan tenure and you can easily calculate this final amount using an EMI calculator. The number of equated monthly installments is equal to the number of months in the loan repayment tenure.
 

EMIs are beneficial as you can pay the borrowed amount back in parts and reduces the financial pressure on the borrower. The EMI style is preferable as it is not easy for everyone to pay back a lump sum amount of money all at once especially in case of large amount such as home loans. Therefore, EMIs are an added advantage as you can pay little over the loan tenure and repay the amount borrowed in full. EMIs gives a broader section of society the option to realize their dreams of affording expensive things, such as a house, car, etc., that they won’t be able to buy if they needed to make payments all at once. Using an EMI calculator, you can easily figure out your loan repayment requirement and plan your monthly budget accordingly. You have the flexibility to decide the amount that you are comfortable to pay off monthly and the duration for which you wish to make the payments depending upon your income and financial stability.
 

EMI payments contribute towards the loan amount and accrued interest on the loan amount. The initial EMI payments contribute more towards the interest component of the loan and this procedure is termed as front loading. In the later stages of the loan tenure, the major contribution of the EMI goes towards repayment of the loan principal.

Commonly, EMIs are fixed and the borrower has to pay fixed monthly installments to satisfy the loan amount. But, the loan EMIs can vary in the case of floating interest rate loans and prepayments. The amount of your monthly EMI depends on certain factors pertaining to your loan. You can calculate the EMI applicable to your loan using the formula for calculating EMI. Calculating EMIs using the formula is not an easy task and involves complicated calculations. Rather, opting for an EMI calculator is a better choice as it determines EMIs within seconds of your input.
 

How are Loan EMIs Calculated?

Loan amount, tenure and interest rate are the three key parameters of a loan and these vary in case of different loan providers. EMI applicable to a loan varies according to all these three parameters. Therefore, before choosing a particular loan, it is very important to have an understanding of these three parameters and how do they relate to the loan EMI. An EMI, or equated monthly installment, is the amount that is payable by you every month to the lender in order to satisfy the principal and the accumulated interest. You can calculate EMI for loans in the following three ways:
 

Calculate Your EMI Using Mathematical Formula

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

In this formula the variables stand for:

EMI is the equated monthly installment
P is the principal or the amount that is borrowed as a loan
R is the rate of interest that is levied on the loan amount (the interest rate should be a monthly rate)
N is the tenure of repayment of the loan or the number of monthly installments that you will pay (tenure should be in months)

This is the same formula an EMI calculator uses to provide you with the correct EMI payable within seconds.

Let us consider an example to understand EMI calculations in a better way,

For instance, you have taken a personal loan of Rs. 2 lakhs for 2 years at an interest of 20 % p.a.

Firstly, we need to convert the annual interest rate into a monthly rate and the tenure into months.

To calculate the monthly interest rate, we divide the annual interest rate by the number of months in a year, i.e. 12, so monthly 20/12 = 1.66% per month

The 2-year loan tenure must also be converted into months before integrating into the formula i.e. 24 months

Now we have the three variables with us which we can integrate into the formula as follows:

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

EMI= [2,00,000 x 1.66/100 x (1+1.66/100) ^ 24 / [(1+1.66/100) ^ 24 - 1)

EMI= Rs. 10, 179

The EMI calculator formula is universal and can be applied to different loans. The variation in EMI value occurs according to the three key variables, i.e. the loan amount, the loan tenure and the interest rate. The EMI payment is directly proportional to the loan amount and interest rates, which implies that with increase in amount and interest rate, the EMI on the loan also increases. However, the EMI is inversely proportional to the tenure of loan, which means that though the amount of paid interest increases with longer tenures, but the EMI payments decrease if the loan is repaid over a longer time period.

Calculate Loan EMIs Using Excel

You can also calculate your EMIs using the Excel spreadsheet. In Excel, you need to use the function PMT for calculating EMIs.

The formula which EMI calculator formula in excel uses the following syntax: PMT (rate, nper, pv).

The variables in the above formula are:
rate – Interest rate for the loan.
nper – Total number of payments for the loan.
pv – Present value/principal.

Calculate Loan EMIs Online Using Loan EMI Calculator

Online EMI calculator is a finance calculator which is available online and can be used to calculate your EMIs, compare EMIs for different loans and different tenures.

There are different types of EMI calculators based upon the types of loan such as
 

• Car loan
• Home loan
• Personal loan
• LAP
• Education loan
• Gold loan

Although each and every the EMI calculator works on the same three variables, you can use the EMI calculator which caters to your requirement.

Types of EMI Calculator

EMI Calculators can be of various types depending upon the loan you choose. You can find various EMI calculators for different loans on Paisabazaar and use them as per your requirement.

Home loan EMI calculator
 

The home loan EMI calculator is used to calculate the EMIs you pay in case of a home loan. While buying a home is a very important decision both financially and personally, taking a home loan requires a high degree of planning and research especially because of the loan’s long tenure and high loan principal amount. Paisabazaar’s Home loan EMI calculator has been designed to be user-friendly and it helps individuals calculate their home loan EMIs instantly. Home loans are sanctioned on the basis of the property cost and the borrower’s repayment capacity. They are long term loans which can be repaid up to a maximum of 30 years. Based on your personal requirements and eligibility criteria, you can input the loan amount, tenure and interest rate, in order to calculate your home loan EMI.

Car loan EMI Calculator
 

Car loan EMI calculator lets you know your car loan EMIs based upon the loan amount, tenure and interest rate. Lenders offer different schemes for buying cars, both new and old. Buying your dream car requires you to make a substantial investment which can be met through a car loan. But, you should keep in mind that the car loan amount borrowed has to be repaid back with interest within a stipulated time-period of up to 5 years. If you are not able to pay back the amount owed, then the lender can take away your vehicle and auction it off to recover the balance amount owed. Therefore, it is always best to use the Car loan EMI calculator, to figure out an EMI amount which you are comfortable paying back without straining yourself financially.

Personal Loan EMI calculator
 

Personal loans are “all-purpose loans”, which implies you can get a personal loan for any purpose, like funding your travel or medical expenses, etc. Being an unsecured loan, the interest rate is comparatively higher and the duration is shorter. The personal loan EMI calculator is the ideal tool which helps you assess your repayment capabilities and reach a loan amount which you are comfortable paying back. It works on the same parameters as other EMI calculators, such as the loan amount, tenure and interest rate. You can experiment with the EMI calculator to reach a loan amount which suits your requirements and which you can pay back with ease.

Education loan EMI calculator
 

The cost of education has skyrocketed and affording good education is becoming a difficult task for parents. Education loan funds the cost of education of a student within the country and also abroad, with repayments. With the help of Education loan EMI calculator you can calculate the amount which you will have to pay every month to satisfy the lent amount plus the accrued interest. The repayment in case of education loan does not start instantly but after a moratorium period, which is usually 6 months after course completion or after the student gets a job, whichever is earlier. However, there are usually a few benefits in case you plan to start servicing your education loan during the moratorium period.

Loan against property EMI calculator
 

Loan against property is a secured loan which can be availed against any property owned by you (residential, commercial or land) which has to be mortgaged with the lender. Use EMI calculator for LAP to calculate the EMI for the loan so that you do not exceed your capacity for repayment and end up straining yourself financially. Being a secured loan, the property which you pledge as collateral can also be seized by the lender to make up for the difference if you are unable to keep pace with your EMI repayment schedule. All the above calculators work on common parameters and use the same EMI calculator formula to arrive at the final EMI amount payable. The only difference being that there might be a minimum and maximum restriction on these parameters with respect to the type of loan.
 

How an EMI Calculator Works?

EMIs can be calculated by using EMI calculators that are available online on the Paisabazaar website. These calculators are handy tools for calculating loan EMIs and require just seconds to display the final result, which shows the payable EMI.EMI calculators require certain variables to be input by the user for determining the loan EMIs, which include:

Loan amount

The loan principal or the actual amount borrowed as a loan for purchasing the house, car, or any other requirement. This loan amount depends upon a number of factors related to the loan applicant and the cost of the purchase. The interest is applied on this loan principal amount. Higher the loan amount, higher is the EMI that you will pay each month. The principal amount that you wish to borrow should be entered into the EMI calculator in the space which says loan amount.

Tenure of the loan

This refers to the total time period of repayment of the loan. Loan tenures vary depending on the type of loan, loan principal and also the lender you are borrowing from. For example, personal loans are shorter tenure loans up to a maximum of 5 years whereas home loans are longer tenure loans which can go up to a maximum of 25-30 years. The longer the tenure of the loan, the more will be the interest that you will have to pay and thus higher will be the EMIs.

Interest Rate

It is the rate at which the interest is charged on the amount lent to the borrower. The interest rate also varies from one type of loan to another, on the basis of the amount lent and from one lender to another. It is best to compare the interest rates offered by different lenders for a particular loan, before you make the final choice for the loan. The EMI can vary according to the type of interest rate charged on the loan, fixed, floating or hybrid.

What is a Loan Amortization Schedule?

A loan amortization schedule details the loan repayment process. It systematically displays the EMI breakup between the principal and interest components of the loan. Every loan EMI is divided into two parts to ensure that both the interest and the principal amount of the loan are serviced simultaneously. But, the amount that goes towards paying off the principal component of the loan varies and the remaining amount goes towards paying off the interest component. At the beginning of the loan tenure, a major portion of each EMI is used to fulfill the interest component of the loan. But, as the loan matures, the percentage of EMI that goes towards the principal component increases. While an EMI calculator only provides approximate calculations, creating the amortization schedule involves complex mathematical calculations and the spread can be obtained from your lender if required. This schedule is therefore more useful to loan borrowers in order to make better decisions related to pre-payment or refinance of loan and also provides the interest details based on which you can avail tax exemptions.

Factors Affecting Loan EMI

EMI or Equated Monthly Installments are often not fixed over the loan period and can change due to a number of factors. When you consider taking a loan, you may use EMI calculators and calculate your EMI estimate by taking into account different factors related to your loan which include loan amount, interest rate and loan tenure. However, these factors do not stay the same and can change over time leading to changes in your EMI payments. This is especially true in case of loans that feature long tenures such as home loan, which are currently linked to the MCLR (marginal cost of lending rate)-based interest rates.

These factors which can affect the monthly EMI amount include the following:
 

Change in interest rate during the loan tenure

Loans can be offered at fixed, floating or hybrid interest rates. In the case of fixed interest rate, the rate stays the same throughout the duration of the loan and the loan repayment made is fixed for the entire tenure. However, in floating interest rate loans, the interest rates can change many times during the tenure of the loan. This change can impact the loan EMI either positively, negatively or not at all. In hybrid interest rate loans, a mixed interest rate of fixed and floating rate is applied. In the starting, fixed interest rate is applied and later in the loan tenure the interest rate becomes floating.

The rate of interest on different loans changes as and when the Reserve Bank of India regulates its standard rates. This change does not affect fixed interest rate loans. On the other hand, in the case of the floating rate of interest the EMI payments can increase or decrease.
 

Prepayment of the Loan Amount

Prepayment of the loan amount can be done for most of the loans and usually all banks allow you to prepay the loan ahead of schedule by making lump sum payments, however, there may be a penalty associated with the prepayment. If you make any payments which are greater than your monthly EMI, the principal amount will be decreased, which will in turn reduce the EMI payment you need to make each month to pay off the loan amount payable.

Prepayment can be done after a certain time as stipulated under the terms and conditions provided by the lender. But, prepayment can only be done on payment of prepayment charges which are levied on the outstanding amount. This charge is usually 1-3% of the outstanding amount and some lenders even waive this prepayment fee subject to certain terms and conditions.
 

Change in Loan Tenure

If you can work out with your loan provider for a new loan term or switch over to a new loan tenure with a new loan provider (such as home loan balance transfer), then your EMI may increase or decrease accordingly. Changes in loan tenure can impact your EMIs in a big way, so take a thoughtful decision after considering all the factors and after using EMI calculators to check with probable EMIs. The longer the loan tenure, the lesser the value of the individual EMI payable as compared to shorter tenures. In case of shorter tenures, the loan is repaid faster and total interest paid out to repay the loan amount is lower than longer tenure loans.
 

Loans with Flexible Repayment Options

Some loan providers offer flexible loan repayment options that feature varying EMIs. In step-up loans, you pay lower EMIs initially and the EMI payable increases as you progress along the loan tenure. In step-down loans, you have to pay higher EMIs at the start which get reduced at a later stage. Step-up loans are a better option for borrowers who are borrowing towards the beginning of their career, whereas step-down loan option is useful for borrowers who are close to their retirement years.

EMI payment is an integral part of a loan and you take pains to plan ahead when determining the EMI amount that you are comfortable to pay back. As you will need to aside a particular amount each month from your income, make sure you choose an EMI which does not put your monthly budget under undue stress. So make sure you assess your repayment capacity using a loan EMI calculator before you make the final decision on your home loan.
 

Benefits of EMI Calculator

The main benefit of an EMI calculator for borrowers is that they get to know how much money they will need to pay towards their loan each month so that they do not end up straining themselves financially and end up in financial distress. Loan EMI calculator helps the borrower decide on an EMI amount which can be comfortably repaid over the tenure of the loan.

The benefits of this calculator are just not restricted to the above-mentioned point. There are additional benefits to it, these are:
 

• Anytime Access

The calculator can be accessed anytime and anywhere. You can use the calculator any number of times as per your convenience. You need not visit the bank branch or get involved with figuring out complex mathematical calculations; instead, you can just access the internet and use the EMI calculator.
 

• Accurate Results

Doing calculations by hand comes with the risk of making mistakes. Further, doing the same calculations, again and again, can lead to more mistakes and further erroneous results. When you individually calculate EMIs on loans offered by different banks the chance of errors increases further. The online EMI calculator helps you in making error-free calculations at the click of a button.
 

• Saves you from time-consuming and complex calculations

Comparing the loans offered by different banks can become very boring and time-consuming as you are using the same formula again and again. With pen and paper, you will need to spend long hours to calculate EMIs for a loan. However, with this online tool, you have the benefit to save your precious time and complete all the lengthy and boring calculations in seconds. So, you can try out as many combinations for amount, tenure and interest rates which you want to from the convenience of your home.
 

• Aids the Financial Planning Process

When you calculate EMI for a loan, you know the amount which you will have to pay when you borrow a loan of the specific amount, tenure and interest rate. This helps you plan your finances prior to taking the loan so that your monthly budget does not take a hit. You can also vary the loan parameters to reach the most suitable EMI as per your requirements.
 

• You can use an online EMI calculator for every loan

Calculating loan EMIs was never this easy! You can use a different calculator for every type of loan be it one for home, car or education. Although the parameters for every loan are basically the same, there can be instances where you will feel the need to use loan specific EMI calculators. This means that every loan EMI calculator is suitable for a particular loan and should be used for only the specific one.

How to Use Paisabazaar’s Loan EMI Calculator 

Paisabazaar’s EMI calculator has been created to be user-friendly and easy-to-use. Anyone can use our calculator following these simple steps:
 

• Log on to the Paisabazaar’s EMI calculator page which is listed under the financial tools tab
• Here, you have the option to use different loan EMI calculators, i.e. home loan, personal loan, car loan etc.
• Click on the EMI calculator tab you want to use
• You will reach a page where you will need to enter the loan parameters (principal, interest rate, and tenure)
• Enter the loan amount, rate of interest and loan tenure in the space provided or you can use the sliders for the same
• The moment you enter the three loan parameters, you instantly get your payable EMI amount
• Now you can vary the parameters and try out different combinations to reach your best-fit EMI
• Subsequent to completion of the EMI calculation, you have the option to check your loan eligibility, get the best loan quotes based upon your eligibility and requirements and also apply for the loan online through Paisabazaar.com.
   

Cut the Frills with Paisabazaar’s Loan EMI Calculator

Paisabazaar’s EMI Calculator is a handy tool which can be used to calculate the monthly installments payable for all types of loans on offer, be it a personal loan, car loan, education loan or home loan.

Calculating EMIs manually can be exhausting and time-consuming when considering the complex calculations involved. So why opt for the stressful calculations by hand when you can do it the hassle-free way? Paisabazaar has designed this EMI calculator to help you enjoy a hassle-free EMI calculating experience.

Paisabazaar’s EMI calculator is simple to use and can be used for calculating the EMIs on any and every type of loan!

Other benefits linked to the EMI calculator include:
 

• Calculate your loan EMI
• Experiment with the EMI calculator to reach an EMI amount of your choice
• Check your loan eligibility
• Get the best loan offers according to your eligibility and requirements
• Compare different loans against pre-set parameters
• Apply online for a loan immediately
   

EMI Calculator FAQs

Q. How can I make the best choice when using an EMI calculator?

Ans. EMI calculator is a very handy tool as it not only determines the loan EMI but also tabulates a list of best loan offers on the basis of your eligibility and loan requirements. You can compare EMIs for different loans using the EMI calculator. You can compare the tabulated list of loans against set parameters and make an informed choice.

Q. Can I use same EMI calculator for home, car and personal loans?

Ans. Usually, the home loan EMI calculator, car loan EMI calculator and personal loan EMI calculator work based on the same three parameters. These parameters include loan amount, loan tenure, and interest rate. The main difference between the calculators is the maximum principal amount that is allowed as input, this restriction leads one to choose the EMI calculator based on the type of loan.

Q. Do EMI calculators give more accurate results than excel sheets?

Ans. Accurate results can be obtained from both excel sheets and the online EMI calculator. The only major difference being that online calculators save you from the hassles of lengthy and tedious calculations and tabulate your EMI within seconds. Whereas using an excel sheet calculator, you may have to put in more time and effort. For this reason, online calculators have become the most preferred choice.

Q. What is loan amortization schedule?

Ans. In the context of a loan, amortization is a systematic arrangement table of the loan payment process. The equated monthly installments made towards loan repayment go towards paying off the principal as well as interest accrued. Loan amortization table gives you a clear idea about the amounts paid towards these two components over the loan tenure. Therefore, understanding the amortization schedule is very important to get a better picture about how your loan is repaid.

Q. Is the EMI calculated by the EMI calculator the same as the actual bank EMI?

Ans. EMI calculated by the EMI calculator tool is based upon your inputs. When it comes to the Bank EMI, there might be slight changes in the loan amount, loan tenure, interest rate and processing fees for the loan. If the bank does not approve the exact loan amount for the tenure and the interest rate you used as input, the EMI that you will have to pay may differ slightly from the EMI that you had calculated using the EMI calculator tool.