We all have come across the word “EMI” and “EMI calculator” in our life more times than once in our life. If you are taking loan to buy a car for your loved ones or want to gift a home appliance to someone invariably you have to repay your loan in EMI. It is one of the most commonly used jargons of lending industry.

EMI stands for Equated Monthly Installment. It is the amount that you pay every month to Bank or Lending institution till your whole amount is paid off. EMI consists of interest part and principal to be repaid. EMI is the sum of principal amount and interest amount to be paid divided by total tenure of loan in months. Initially, Interest component of EMI would be larger and will gradually reduce until it becomes nil. The exact percentage allocated towards payment of the principal depends on the interest rate. The proportion of principal and interest in each EMI would change with time. You would pay more of principal and less of interest with each EMI. EMI has several advantages over lump sum payment like affordability, flexibility, peace of mind etc.

EMI calculator uses following formula to calculate EMI-

E = P.r.(1+r)^n/((1+r)^n-1)

Where,

E stands for EMI

P stands for Principal Loan Amount in Rupees

r stands for rate of interest calculated on monthly basis. ( r = Rate of interest annualy/12/100. For eg. If rate of interest is 10.5% per annum, then r = 10.5/12/100=0.00875)

n stands for loan term / tenure / duration in number of months.

You can finance virtually each and every loan on the earth on EMI. Here is just a simple list for your reference-

- Home Loan
- Loan against Property
- Business Loan
- Vehicle Loan
- Education Loan
- Gold Loan
- Loan against Bank FD
- Loan against Mutual Funds.

EMI calculators are automated tools and you don’t need mechanical devices like handheld calculators to calculate your EMIs. Moreover, unlike traditional handheld calculators modern EMI calculator gives holistic information like principal and interest component of each EMI, date of payment etc.

You can also create an EMI calculator on your own by using any spreadsheet software like MS – Excel. Moreover, there are many online websites like all websites of Banks, NBFCs etc provide EMI calculator on their website. You can also visit our website LoanKuber.com for easy to use EMI calculator.