EMI Calculator

What is EMI?

EMI stands for Equated Monthly Installment. It is the fixed payment made by a borrower to a lender at a specified date each calendar month. The EMI is calculated in such a way that the borrower pays a fixed amount every month, which consists of the interest on the loan and a part of the principal amount.

How Can an EMI Calculator Help You?

An EMI Calculator is a practical financial tool that helps borrowers estimate their monthly payments on a loan.

• Budget Planning: By knowing the exact amount of EMI, borrowers can plan their monthly budget more effectively. Helps in understanding the monthly financial commitment and ensuring there is enough balance left for other expenses.
• Loan Comparison: Allows borrowers to compare different loan offers from various lenders. By inputting different interest rates, loan amounts, and tenures, borrowers can choose the loan that best fits their financial situation.
• Financial Planning: Helps in long-term financial planning by providing a clear picture of the loan repayment schedule. Borrowers can plan their finances better and ensure they do not miss any EMI payments, thus maintaining a good credit score.
• Time-saving and Convenience: Saves time by quickly calculating EMIs without needing complex manual calculations. Provides instant results, making it easier to make informed financial decisions.

How Does the EMI Calculator Work?

The EMI (Equated Monthly Installment) calculator uses the PMT function to calculate the monthly EMI. It provides the break-up of the Principal and Interest component paid during the loan tenure.

• Formula for EMI:
  • EMI = \(\frac{P \cdot r \cdot (1 + r)^n}{(1 + r)^n - 1}\)
  • P = Principal loan amount
  • r = Monthly interest rate (annual interest rate divided by 12 and then by 100)
  • n = Number of monthly installments (loan tenure in years multiplied by 12)