EMI Calculator for Home Loan, Personal Loan or Car Loan!
What is EMI?
For short, Equated Monthly Installment – An EMI is the sum paid to the bank or other financial institution every month until the loan is entirely paid off. It comprises loan interest as well as a portion of the principal amount to be repaid.
The sum of the principal and interest is divided by the loan’s term, or the number of months the loan amount must return. You must pay this sum every month.
The interest component of the EMI would be higher at the beginning and gradually decrease with each payment. The interest rate determines the exact percentage allocated to the principal amount.
While your monthly EMI payment will remain constant, the proportion of principal and interest components will alter over time. With each payment, you’ll pay more toward the principal and less toward interest.
How to calculate EMI?
EMI calculation formula:
In this formula-
E represents for EMI (Estimated Monthly Installment)
P Is for Principal Loan Amount
r is represented to the rate of interest, which is calculated on a monthly basis. (i.e., r = Rate of Annual interest/12/100. If the interest rate is 13.5 per year, then r=13.5/12/100=0.01125)
n is loan tenure or term, which is the time period to repay the loan amount. An example, if your bank loan amount is 20,00,000 at the annual interest of 13.5% and tenure is 10 years or 120 months. Then your EMI = 20,00,000*0.01125* (1+0.01125)120/ ((1+0.01125)120-1) = 30,454.86 (round off 30,455).
i.e., you will have to pay ₹30,455 for 120 months to repay the entire loan amount. The total amount payable will be ₹30,455* 120 = ₹36,54,600 that includes ₹16,54,600 as interest toward the loan.
Calculating EMI by hand or in MS Excel for various combinations of the principal loan amount, interest rate, and loan term using the EMI mentioned above method is time consuming, difficult, and error-prone.
Our EMI calculator simplifies this calculation for you and provides you with the answer in a split second, along with the monthly schedule and total payment breakdown.
How to use our EMI Calculator?
Our EMI Calculator is simple to use, easy to comprehend, and quick to use, with instant results. Using this calculator, you may calculate the EMI for a home loan, car, personal, education, or any other fully amortizing loan.
In the EMI Calculator, select the following information:
- The principal loan amount that you desire to obtain
- Loan term (months or years)
- Interest rate (%)
- Down payment (%)
Adjust the values in the EMI calculator form using the slider. The loan amount slider increases or decreases the amount in 1 lac variable. Once you select the desired loan amount, interest rate, down payment, and loan term, click on the “Calculate” button.
Our calculator calculates the EMI and displays below monthly payment amount, principal, interest, total interest, and the balance amount on a monthly or yearly basis. You can also get a pdf report of EMI details by entering your email in the above box.
Calculation of Floating Rate EMI
You calculated floating/variable rate EMI using two opposing scenarios: optimistic (deflationary) and pessimistic (inflationary). Loan amount and loan tenure, two components necessary to calculate the EMI, are under your control; that is, you will pick how much loan you need to borrow and how long your loan should be.
However, banks and financial firms set interest rates based on the RBI’s rates and regulations. As a borrower, you should evaluate the two extreme interest rate increases and decreases and calculate your EMI under these two scenarios.
This calculation will assist you in determining how much your EMI is affordable, how long your loan term should be, and how much you should borrow.
Optimistic (deflationary) scenario: Assume that interest rates fall by 1% to 3% from their current levels. Consider this scenario and compute your EMI. It will reduce your EMI, or you may choose to decrease the loan term.
For example, if you take out a home loan to buy a property as an investment, an optimistic scenario allows you to compare it to other investment alternatives.
Pessimistic (inflationary) scenario: Assume that interest rates are raised by 1 percent to 3 percent. Is it possible for you to continue paying the EMI without too much difficulty? Even a 2% increase in interest rates can result in a considerable increase in your monthly payment throughout the life of the loan.
This type of calculation allows you to plan for such future possibilities. For example, when you take out a loan, you make a financial commitment that will last several months, years, or decades.
So consider both the best and worst-case scenarios and be prepared for both. In a nutshell, hope for the best but brace yourself for the most critical!