Home Articles How EMI Calculator Works?

# How EMI Calculator Works?

##### Mr. C.S. Sudheer | Updated On Monday, July 02,2018, 04:25 PM
5.0 / 5 based on 1 User Reviews

Today, is the age of loans. Money is always in short supply. What choice do you have, but to take a loan? Let’s lighten the load with a funny joke…..

Always live within your income, even if you have to borrow money to do so.”

You want your own home? Well….just avail a home loan. Need a car badly? There’s a car loan for you. Need money for your daughter’s marriage…. There’s a personal loan, waiting for you. Whichever loan you avail, one thing stays constant. Equated Monthly Installments also called EMI’s. If you need a loan really badly, you better familiarize yourself with EMI and how it’s calculated. Want to know more about EMI?

Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website. IndianMoney.com’s commitment is to help you “Save, Invest, Spend and Borrow Consciously." IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets.

### What is EMI?

You avail a loan from a reputed bank in India. You have to repay this loan with interest. EMI is just the amount you (borrower) repay to the bank, each calendar month, to clear your outstanding loan. You have to repay the EMI each month, on a particular fixed date, for the entire duration (tenure) of the loan, till you repay the entire outstanding amount. (amount borrowed + interest).

### What is EMI break-up?

EMI is a combination of the principal and interest, you have to repay on the loan.

EMI  =      EMI (Principal)   +     EMI (Interest)

During the initial years of the repayment of the loan, most of the amount you repay, goes towards paying the interest on your loan. Most of your initial repayments are towards EMI (Interest). As your loan matures, most of the amount you repay, goes towards paying back the EMI (Principal) on your loan. The outstanding amount on your loan, soon reduces.

### How is EMI Calculated?

The EMI of your loan depends on:

Amount of loan: The amount of loan you have borrowed from the bank.

Rate of interest: This is the interest, the bank charges on the loan.

Tenure: The time you have to repay the loan with interest.

The formula for calculating EMI is:

P   =  Loan amount availed from the bank

I = Interest rate charged by the bank per month

N = Number of installments

Let’s check out EMI calculations, with a simple example. You have availed a loan of INR 1,00,000 from a bank. You have to pay an interest of 12%, with a loan tenure of 12 months.

You have to pay an EMI of INR 8,885 on your loan.

### How EMI Calculator Works?

IndianMoney.com has developed calculators, to calculate EMI on your car loan, home loan and even personal loan.

#### Want a car loan to buy a car?

Take a look at our car loan EMI Calculator, which gives you the car loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.

You can check out our home loan EMI Calculator, which gives you the home loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.

#### Need a personal loan for an emergency?

You can check out our personal loan EMI Calculator, which gives you the personal loan EMI, depending on the loan amount, annual interest and loan period you avail the loan.

Good times are when people make debts to pay in bad times.”

-   Robert Quinlin

Yes….you need a loan in these bad times. Understand what is a good loan and a bad loan, before you avail a loan. If you know how to use a loan, it can be a true friend in an emergency. Be Wise, Get Rich.

5.0 / 5 based on 1 User Reviews

## Mr. C.S. Sudheer

Mr C.S.Sudheer is a management graduate. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.

## Most Popular

How to Make Claim on a Life Insurance Policy?

### 18 July 2012, Wednesday

ELSS - Utilizing the power of compounding

### 14 March 2014, Friday

Why one must never neglect estate planning

### 07 January 2014, Tuesday

Things to Know About Hybrid Mutual Funds

### 26 November 2013, Tuesday

What is Car Insurance and why is it necessary to have one?

## Latest Stories

IndianMoney.com teams up with Oneindia to spread financial literacy

### 23 July 2018, Monday

Investment Ideas With Rs 500

### 23 July 2018, Monday

Minimum Deposit Reduced To Rs 250 for Sukanya Samriddhi Yojana

### 23 July 2018, Monday

ITR Filing: Save Yourself From Black Money Crackdown

### 23 July 2018, Monday

Do Not Have Life Insurance: Read This Book

Get It now!