## What is EMI?

Equated Monthly Installment – EMI for short – is the amount payable every month to the bank or any other financial institution until the loan amount is fully paid off. It consists of the interest on loan as well as part of the principal amount to be repaid. The sum of principal amount and interest is divided by the tenure, i.e., number of months, in which the loan has to be repaid. This amount has to be paid monthly. The interest component of the EMI would be larger during the initial months and gradually reduce with each payment. The exact percentage allocated towards payment of the principal depends on the interest rate. Even though your monthly EMI payment won’t change, the proportion of principal and interest components will change with time. With each successive payment, you’ll pay more towards the principal and less in interest.

Here’s the formula to calculate EMI:

where

**E** is EMI

**P** is Principal Loan Amount

**r** is rate of interest calculated on monthly basis. (i.e., r = Rate of Annual interest/12/100. If rate of interest is 10.5% per annum, then r = 10.5/12/100=0.00875)

**n** is loan term / tenure / duration in number of months

For example, if you borrow ₹10,00,000 from the bank at 10.5% annual interest for a period of 10 years (i.e., 120 months), then EMI = ₹10,00,000 * 0.00875 * (1 + 0.00875)

^{120}/ ((1 + 0.00875)^{120}– 1) = ₹13,493. i.e., you will have to pay ₹13,493 for 120 months to repay the entire loan amount. The total amount payable will be ₹13,493 * 120 = ₹16,19,220 that includes ₹6,19,220 as interest toward the loan.

Computing EMI for different combinations of principal loan amount, interest rates and loan term using the above EMI formula by hand is time consuming, complex and error prone. Our EMI calculator automates this calculation for you and gives you the result in a split second along with visual charts displaying payment schedule and the break-up of total payment.

## How to Use EMI Calculator?

With colourful charts and instant results, our EMI Calculator is easy to use, intuitive to understand and is quick to perform. You can calculate EMI for home loan, car loan, personal loan, education loan or any other fully amortizing loan using this calculator.

Enter the following information in the EMI Calculator:

- Principal loan amount you wish to avail (rupees)
- Loan term (months or years)
- Rate of interest (percentage)
- EMI in advance OR EMI in arrears (for car loan only)

Use the slider to adjust the values in the EMI calculator form. If you need to enter more precise values, you can type the values directly in the relevant boxes provided above. As soon as the values are changed using the slider (or hit the ‘tab’ key after entering the values directly in the input fields), EMI calculator will re-calculate your monthly payment (EMI) amount.

A pie chart depicting the break-up of total payment (i.e., total principal vs. total interest payable) is also displayed. It displays the percentage of total interest versus principal amount in the sum total of all payments made against the loan. The payment schedule table showing payments made every month / year for the entire loan duration is displayed along with a chart showing interest and principal components paid each year. A portion of each payment is for the interest while the remaining amount is applied towards the principal balance. During initial loan period, a large portion of each payment is devoted to interest. With passage of time, larger portions pay down the principal. The payment schedule also shows the intermediate outstanding balance for each year which will be carried over to the next year.

## Floating Rate EMI Calculation

We suggest that you calculate floating / variable rate EMI by taking into consideration two opposite scenarios, i.e., optimistic (deflationary) and pessimistic (inflationary) scenario. Loan amount and loan tenure, two components required to calculate the EMI are under your control; i.e., you are going to decide how much loan you have to borrow and how long your loan tenure should be. But interest rate is decided by the banks & HFCs based on rates and policies set by RBI. As a borrower, you should consider the two extreme possibilities of increase and decrease in the rate of interest and calculate how much would be your EMI under these two conditions. Such calculation will help you decide how much EMI is affordable, how long your loan tenure should be and how much you should borrow.

**Optimistic (deflationary) scenario**: Assume that the rate of interest comes down by 1% – 3% from the present rate. Consider this situation and calculate your EMI. In this situation, your EMI will come down or you may opt to shorten the loan tenure. Ex: If you avail home loan to purchase a house as an investment, then optimistic scenario enables you to compare this with other investment opportunities.

**Pessimistic (inflationary) scenario**: In the same way, assume that the rate of interest is hiked by 1% – 3%. Is it possible for you to continue to pay the EMI without much struggle? Even a 2% increase in rate of interest can result in significant rise in your monthly payment for the entire loan tenure.

Such calculation helps you to plan for such future possibilities. When you take a loan, you are making a financial commitment for next few months, years or decades. So consider the best as well as worst cases…and be ready for both. In short, hope for the best but be prepared for the worst!

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Great!!! But can you make it to monthly breakup calculation also.

We will add this shortly.

perfect

innovative and user friendly, thanks

Awesome tool. Good work. Especially on the usability part.

good..

very helpfull

Excellent

simply superb 🙂

Best

It is really good and more useful to find the EMI. One way it needs to be improved, which is based on Monthly payment I want to get the No. of years/months.

We are working on this feature and monthly payment schedule will be available in a few days.

its grate appl’n …..superb….

nice app. thanks

simple and excellent

I used the website lot of times.. Thanks

excellent

Really great work. :):)

one of the best emi calculators and emi calculator.

in this calculations are for compound interest, what about emi with simple interest?

Would anybody tell me the difference between diminishing and flat rate?

Flat rate and reducing rate are two different methods of calculating interest on loans. In flat rate, interest is calculated on the full amount borrowed for the entire loan tenure irrespective of monthly payments. For example, you borrow Rs. 10,00,000 for 5 years and the interest rate is 10%. Then in the flat rate method, the interest payable will be Rs. 5,00,000. Every year you have to pay Rs. 2,00,000 (principal amount) + Rs. 1,00,000 (interest 10% of 10,00,000) = Rs. 3,00,000. So you will end up with paying principal amount Rs. 10,00,000 + interest Rs. 5,00,000 = Rs. 15,00,000.

In reducing balance method the interest is calculated on outstanding amount and not on the entire amount borrowed. For the above example, if the interest is calculated in yearly reducing balance method then the interest payable will be Rs. 3,00,000. So, first year you have to pay Rs.2,00,000 (principal amount) + Rs. 1,00,000 = Rs. 3,00,000. In the second year, Rs. 2,00,000 (principal amount) + Rs. (10% on remaining Rs.8,00,000 for the remaining 4 years) = Rs.80,000. In the third year Rs.2,00,000 + Rs. (10% on remaining Rs.6,00,000 for the remaining 3 years) = Rs. 60,000. In the fourth year Rs. 2,00,000 + Rs. (10% on remaining Rs.4,00,000 for the remaining 2 years) = Rs. 40,000. In the fifth year Rs. 2,00,000 + Rs. (10% on remaining Rs.2,00,000 for the remaining 1 years) = Rs. 20,000. Here, the calculation is done using yearly reducing balance method. However, while paying EMI you pay a portion of your loan every month to the bank. Therefore, lenders calculate the interest using monthly reducing balance method. In this method, every month the interest is recalculated on outstanding amount, which is even more beneficial to you.

Thus, to you as a borrower reducing interest rate is beneficial and proves to be lot cheaper that flat interest rate. Reducing / diminishing rate is also referred to as effective interest rate.

This gives a very clear picture of the loan repayment and interest we are going to pay in nushel. If any bulk payment in the tenure can be added to the calculator will be of much use. Raffic

VERY EASY ,VERY NICE, EVEN SCOOL BOY ALSO EASILY UNDERSTAND

WHAT IS THE DIFFERENCE ADVANCE E M I OR ARRIORS EMI? CAN ANY BODY PLEASE

Please read here: http://emicalculator.net/emi-in-advance-vs-emi-in-arrears

Thank u so much…… this is fantastic……..

This is very useful …….. good job…….

Just perfect and easily understandable