The EMI Calculator is a free online calculator which can help you calculate the monthly EMI, total interest and total payment on any loan (home loan, personal loan, car loan or education loan). You can type in a few details and have an instant and accurate answer, without having to juggle around powers and percentages. You will learn what EMI is, how it is calculated in this EMI calculator, and how to use a worked example, along with the various factors that influence your monthly payments so you can make your next loan a successful one.
What is EMI (Equated Monthly Instalment)?
The fixed amount that you repay each month on a loan is called the Equated Monthly Instalment (EMI) which includes repayment of principal and interest. During the early period of the loan, a greater proportion of EMI will be made up of interest and later during the loan period, a higher proportion will be made up of the principal amount of the loan. The amount of loan, interest rate and tenure are the three factors that affect your EMI. If any of these is changed, the EMI will also change. Once you know this relationship, the calculator merely does the work for you.
EMI Calculator Formula
The calculator employs the same formula, which is widely accepted in the bank community and is used to calculate instalments, as what you would find on a bank's loan sanction letter:
EMI = P × r × (1 + r)ⁿ ÷ [(1 + r)ⁿ − 1]
Where:
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P = Loan amount (principal)
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r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
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n = Number of monthly instalments (tenure in years × 12)
What each variable means
The monthly rate (r) is just the annual interest rate that's converted from the annual rate into a per month rate because EMIs are to be paid every month. Tenure (n) is the total number of EMIs that you'll be making across the entire loan period so, for example, the total number of monthly instalments required for a 15-year loan is 180.
Why this formula is used
This is the industry standard method of reducing-balance, which is used by the banks and NBFCs across India. Since interest is computed each month only on the outstanding balance (not on the principal) this means that your EMI is fixed and the interest/principal ratio changes periodically. If you use this exact formula, the answer that you get on your calculator should closely approximate what your lender quotes.
How to Use the EMI Calculator
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Fill in the amount of the loan (₹).
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You need to enter the interest rate per year (%).
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Type in the number of years.
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Instantly read the result: EMI, Total Interest and Total Payment.
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Vary any value to make comparisons with different configurations.
EMI Calculator: Worked Example
Take a ₹10,00,000 loan at 9% annual interest for a 10-year tenure. If these are plugged into the above formula, the EMI comes out to be approximately ₹12,668/- per month. In the entire period, the interest paid is approximately ₹5.2 lakh and the entire repayment (principal + interest) is around ₹15.2 lakh. If you change the tenure to 15 years in the EMI calculator, you will see that the EMI will reduce, however there will be a corresponding increase in the total interest that will be paid — this is something you should be aware of before you enter into a loan agreement.
Why Use an Online EMI Calculator Instead of Manual Calculation?
When calculating EMI manually, you are dealing with compounding powers and percentages which if you get just one wrong, can give you the wrong repayment schedule. That is what such tools, like the topstockbroker.com, are designed to do; make it easy to explore various loan amounts, interest rates and loan terms instantly, and then compare them side-by-side before even making it to the bank branch. There's nothing like this real-time scenario testing is going to be much more beneficial in an online EMI calculator than a spreadsheet or a pen-and-paper calculation, particularly when comparing a number of loan offers.
Benefits of Using the EMI Calculator
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Before you borrow, know how much every month you'll be paying out for the loan.
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Know the total interest and total payment before you start paying the EMI
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Simply compare various tenures and interest rates in seconds.
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No sign-up required, works on mobile and desktop and is 100% free.
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Eliminates human mistakes and time-consuming calculations.
Factors That Affect Your EMI
Loan Amount
If the rate and tenure remain constant, the bigger the principal, the bigger the EMI — this is the simplest leverage you have.
Interest Rate
If the interest rate changes even by a small amount, then over a long period of time, it can make a real difference in your EMI as interest is calculated on the outstanding amount every month.
Loan Tenure
The longer the term, the less the EMI (installment) will be each month but the more interest that will be paid over the life of the loan — a shorter term will be more expensive per month, but less expensive overall.
Things to Keep in Mind Before Taking a Loan
This is because a longer term will have a lower monthly payment, but will increase the interest paid significantly; if you are able to afford a shorter term, then have a look at it. However, if you do end up with some extra cash, early repayment will cost you the least since the interest rate will be the most significant factor in your EMI. Keep in mind also that the results of this calculator are only as reliable as the information you input into it, and actual bank rates, processing fees/charges may differ; use the output of this calculator to help you make an informed decision, but please check with your banker for current conditions.
Disclaimer: This EMI Calculator is designed to provide information and education only and not financial or investment advice.