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What is EMI?
EMI stands for Equated Monthly Installment. The loan amount that a borrower owes to the bank or other financial institution every month until the balance is fully repaid is known as the EMI. It contains two components, that is, loan interest and a portion of the principal amount to pay back. In addition, the duration or loan repayment term is calculated by dividing the total principal amount and interest. The interest component of the EMI would be large initially but will decrease with each payment. The interest rate determines a precise percentage of principal payments. The principal and interest component amounts will alter over time, but your monthly EMI payment will remain the same. Additionally, each subsequent payment will see a decrease in interest and an increase in principal.
The EMI calculation formula is as follows:
E is EMI
P is the Principal Loan Amount
r is the rate of interest that is calculated every month. (i.e., r = Annual rate of interest/12/100. If the rate of interest is 10% per annum, then r = 10/12/100=0.0083333)
n is loan term/tenure/duration in the number of years or months
For example, when you borrow ₹12,00,000 from the bank at 10% annual interest for a term of 8 years (i.e., 96 months), then you’ll have to pay EMI = ₹10,00,000 * 0.0083333 * (1 + 0.0083333)96 / ((1 + 0.0083333)96 – 1) = 18,209. For 96 months as the repayment of the entire loan amount. The total payable amount will be 18,209 * 96 = ₹17,48,064, which includes ₹5,48,064 as interest toward the loan.
It is time-consuming and challenging and can cause errors in manually calculating EMI using the aforementioned EMI method for different combinations of the principal loan amount, interest rates, and loan tenure. Therefore, using our EMI Calculator, you may automate the calculation and receive accurate answers with graphic charts displaying the total payment breakdown and the payment schedule.
Loan EMI Calculators
How to Use Free EMI Calculator
The freeemicalculator.in provides comprehensive charts, statistical representation, and rapid results. Furthermore, it’s quick, easy to use, and simple to understand. You may calculate the EMIs for any fully amortized loan using our calculator.
Fill in the information below to calculate EMI:
- The amount of your ideal principal loan (rupees)
- Loan duration (months or years)
- Rates of interest (percentage)
- EMI in arrears OR EMI in advance (for car loan only)
You can use the slider to modify the calculator’s settings to make your calculations more effortless. To obtain more precise values, enter the values in the relevant fields provided above. When you modify the parameters using the slider, the EMI calculator will calculate and give you the monthly payment amount. You might also type the numbers straight into the fields.
Here you can get a complete breakdown of the full payment, which includes the total principal and interest due. It will be displayed on the side in a pie chart. The sum of all loan payments represents a percentage of the interest-to-principal ratio. The annual principal and interest payments are also shown in a graph. The payment schedule table also displays how much to pay each month or year during the loan period. Each payment is divided into a section for the principal amount owed and an additional section for interest.
Additionally, during the initial loan term, interest constitutes the majority of all payments. Furthermore, the carryover sum for each year’s intermediate unpaid balance is shown in the repayment plan.
If you are trying to reduce your overall interest expense and shorten the length of your loan with partial prepayments, then our Prepayment EMI Calculator will assist you. Our calculator allows users to compare the claimed and actual interest rates on loans (together with the loan APR) for a purchase or determine the amount of loan you can take.
Floating Rate EMI Calculation
Floating EMI: The floating EMI implies that the interest rates fluctuate every three months. Additionally, the interest rate on your loan will be linked to the base rate set by the RBI, depending on various economic factors. As a result, changes in the base rate will also cause changes in the interest rate on your loan.
When calculating floating/variable rate EMI, it is advised that you consider two opposing scenarios, namely optimistic (deflationary) and pessimistic (inflationary). Here, choose a loan period and the sum of money you need to borrow. Two elements that affect EMI are loan amount and loan term. Additionally, banks and HFCs base their interest rate decisions on the rules established by the RBI. Therefore, you can calculate the EMI as a borrower for optimum results while taking into account the two influencing elements of inflation and a decrease in interest rates. These calculations will help you choose the best loan term, the right amount to borrow, and your EMI.
Optimistic (Deflationary) Scenario: Let’s say the interest rate drops by 2% to 4% from where it is now. Consider this situation while calculating your EMI. Your EMI will therefore be lower in this scenario. As an alternative, you can decrease the loan’s tenure. A strong case enables you to compare a house loan you take out for a real estate investment to other investment options.
Pessimistic (Inflationary) Scenario: In this case, assume the reverse and raise interest rates by 2%–4%. You’ll undoubtedly face having little trouble continuing to make your EMI payments. Even a 2% increase in the interest rate could result in a considerable increase in your monthly payment for the whole term of the loan.
Therefore, with Free EMI Calculator, you can make wise preparations to take loans in the future. When you take out a loan, you agree to pay back a specific sum of money over the course of several months, years, or decades. Consider both the best and worst-case possibilities, and then be ready for both. After that, choose sensibly.