An EMI calculator is an online financial tool that helps borrowers or potential borrowers estimate the EMIs for a loan amount. It is an easy method to determine how much money will be required every month to repay the loan over its period.

To calculate your EMI amount, you need to enter the loan amount, interest rate, and loan term. Using this information, an EMI calculator calculates your monthly installments. Also, it shows the total amount and the interest payable during the complete loan tenure.

It is used for various types of loans, such as consumer-durable loans, home loans, auto loans, personal loans, student loans, and others.

You can calculate your EMI by using this mathematical formula:

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

Where,

P represents the principal amount borrowed.

R represents the per-month interest rate (for example, if the annual interest rate is 12%, then monthly interest will be 1% (12% / 12)).

N represents the loan period in months.

Let’s understand this formula with an example:

Let’s say, you have taken a loan of Rs. 10 Lakh at 12% for 10 years. In this case, P will be Rs. 10 lakh, R will be 1% (12% / 12), and N will be 120 (10 x 12).

Let’s put these values in the formula: 10,00,000 x 1% x (1+1%)^120 / [(1+1%) ^ (120-1)].

After solving the equation, you will get Rs. 27,027.78, your monthly EMI. Hence, in 10 years, you will pay Rs. 17,21,650.80. The total interest you will pay over the 10 years will be Rs. 7,21,650.80

ET Money’s EMI Calculator is very easy to use. You just have to enter the loan information and it will calculate your EMI.

Here are the steps to calculate your EMI:

Step 1: Enter the loan amount

Firstly, you must enter the amount you want to borrow from the financial institution.

Step 2: Enter the rate of interest

Now, you have to enter the rate of interest of the loan. It is the rate at which your lender has agreed to lend you the money.

Step 3: Enter the loan tenure

Lastly, you have to fill out a loan tenure. It is the duration in which you want to pay off your loan. You can enter the loan tenure in both months or years by tapping on the desired option.

Finally, after filling in all the details, the calculator will show you the EMI amount you need to pay for the loan. Also, it will show you the total interest payable during the loan tenure.

Additionally, the EMI calculator will also show you the complete amortization schedule for the loan, which indicates your monthly repayment towards principal and interest.

The EMI calculator is a tool that you can use to determine the monthly installment amount for a loan based on the loan amount, tenure, and interest rate, as well as the principal and interest repayment. The following are some applications:

• An EMI calculator can assist you in creating a budget by providing the precise monthly amount you will have to pay for a loan. It will help you control your expenditures effectively so that they fit your budget.
• It helps you in evaluating the EMI amounts for loans with different rates of interest. You can select the one that best fits your financial situation.
• An online EMI calculator can show you how different interest rates can influence your monthly payments. You can use this information to decide the loan size and term, among other things.
• You can select various tenure choices to see how they impact your monthly payments. This can assist you in selecting a repayment strategy that complements your budgetary objectives.
• Finally, an online EMI calculator can help you manage your finances more effectively and make informed loan choices.

Here are the advantages of using ET Money’s EMI Calculator:

• Easy to use: Calculating the EMI amount manually could be a tedious and time-consuming process. ET Money’s EMI calculator is very easy to use as you can calculate your EMI by following simple steps.
• Quick calculation: You just have to enter some variables, such as the loan amount, interest rate and tenure, in the EMI calculator to calculate your EMI amount.
• Accuracy: Manually calculating your EMI can yield an inaccurate result. This calculator will help you in getting an accurate EMI amount.
• Free of charge: You do not have to pay anything for using the EMI calculator.

EMI calculators come in various types, each serving a specific purpose and facilitating a better understanding of loan repayments for borrowers. Whether it’s a home loan, car loan, personal loan, or other financial commitments, using an appropriate loan EMI calculator can empower individuals to make sound financial decisions.
Let’s understand each of these in detail:

• • Personal-loan EMI Calculator:

Personal loans are taken for short-term expenses such as family vacations, debt repayments, home renovation, medical emergencies etc. You can use a personal-loan calculator to calculate your EMI on the personal loan.

• • House-loan EMI calculator:

Buying a house is a dream goal for everyone, but to buy a house, you need to have a large corpus. So, a home loan comes into the picture, wherein you can take a loan from the bank to buy a house. The home-loan calculator helps you calculate the monthly EMI that you will pay towards your home loan.

• • Car-loan EMI calculator:

Buying a car is also one of the important goals for many. Many banks offer a car loan that will help you to purchase a car. To buy a car, you need to make a downpayment. For the remaining amount, you can take a loan from the bank. Your EMI is calculated on this remaining amount depending on the interest rate and tenure of the loan.

• • Education-loan EMI calculator:

As higher-education costs have risen over the years, the need for education loans has also increased simultaneously. This loan is taken to pursue higher education and the borrower must repay the loan after the end of the moratorium period. An education-loan calculator helps you calculate the EMI that you would need to pay towards your education loan.

• • EMI calculator for a loan against property:

A loan against property is also known as a mortgage loan. Under this loan, you can borrow from a financial institution against physical assets such as land, house, etc., as collateral. The loan against property calculator helps you calculate the EMI for this type of loan.

When you want to apply for a loan, multiple factors including your repayment capacity helps determine your EMI amount. Here are some common factors that can affect your due amount:

• • Loan Amount:

The loan amount is the principal amount you wish to borrow. If the loan amount is higher, then your EMI will also be higher, and vice versa.

• • Interest Rate:

The interest rate is the rate at which the lender has agreed to lend you money. If your interest rates are higher, you must pay higher interest on the borrowed amount, and vice-versa.

• • Loan Period:

The loan period is the duration in which you want to repay your loan amount. A longer tenure may result in lower monthly payments but higher total interest costs. On the other hand, a shorter term helps in keeping the overall interest cost lower. You may be paying higher monthly installments but it will ultimately result in interest savings.

Floating-rate loans are loans in which your EMI amount does not remain constant for the entire loan period. The interest rate on these types of loans is revised at specific intervals. Hence, your EMI amount keeps changing in this type of loan.
Unlike fixed-rate loans, whose interest rate remains constant throughout the loan tenure, floating-rate loans have interest rates that change periodically based on a benchmark interest rate used by the bank. If there is a change in the benchmark rate, then the interest rate on your loan will also change, and EMI will be revised accordingly.

For the banks, the External benchmark rate is used to determine the rate, which can be the repo rate, 3 months treasury bill rate, 6 months treasury bill rate, or Any other benchmark market interest rate. In the case of NBFC, the benchmark could be PLR (Prime Lending Rates).