EMI Calculator

EMI Calculator Formula

The EMI Calculator's formula is based on reducing balance interest calculations, as given below:

EMI =  [P * r * (1 + r)^n] 
              [(1 + r)^n - 1]

Where,

• EMI = Equated Monthly Instalment
• P = Loan principal amount
• r = Monthly interest rate (annual interest rate divided by 12)
• n = Loan tenure in months

EMI Calculator Example

Let us assume that Mr. A wishes to borrow INR 500,000 for five years at an interest rate of 10% annually. The Clear Tax calculator can be used to find Mr A's monthly EMI, by assuming the following components: 

• Amount desired for loan (P) INR 500,000
• Rate of interest (r): 10%/12 = 0.008333
• Duration (n): 5 years

Using the formula, the EMI can be calculated as follows: 

EMI =  [P * r * (1 + r)^n] 
              [(1 + r)^n - 1]

EMI = 500000 x 0.008333 x (1+0.008333)^5
                    (1+0.008333)^(5-1)

At 10% interest per year, a Rs.500,000 desired loan would yield about Rs.10,624 every month.

How To Use EMI Calculator?

Follow the below steps to use the ClearTax EMI Calculator:

• Input the desired loan amount.
• Add the relevant interest rate. 
• Entered your desired loan tenure. 

The EMI calculator will automatically display the monthly EMI, interest and total amount payable. 

Types Of EMI Calculators

There are different types of EMI calculators, depending on the loans you plan to take: 

Home Loan EMI Calculator

Home loans are among the most commonly taken bank loans, often involving large amounts and long tenures. Our easy-to-use Home Loan EMI Calculator will let you know your payable EMI for the respective loan amount, thus ensuring you have your finances in order.

Car Loan EMI Calculator

Before buying your dream car, use our Car Loan EMI Calculator to estimate your monthly payments. With various loan options available, it’s crucial to borrow responsibly to avoid the risk of repossession for missed payments.

Personal Loan EMI Calculator

Personal loans are now commonly used for vacations, home renovations, and more. Our Personal Loan EMI Calculator helps you quickly estimate your monthly repayments with ease. 

Education Loan EMI calculator

With rising education costs, an education loan may be necessary for higher studies. These loans often come with a moratorium period, allowing repayment after graduation. Use our Education Loan EMI Calculator to estimate your monthly payments.

Loan Against Property EMI Calculator

If you own residential or commercial property, you can use it as collateral for a loan against property. Use our Loan Against Property EMI Calculator to understand your monthly repayments.

Factors Affecting Loan EMI

Several factors affect EMI calculation. As the EMI depends on the principal amount, tenure, and rate of interest, any change in these variables can result in a change in the EMI amount.

• Change in interest rate: Fixed rates stay the same, while floating rates tied to MCLR can change, affecting your EMI. Hybrid rates combine both, with an initial fixed rate followed by MCLR-based changes.
• Change in tenure: Switching banks or adjusting tenure can alter your EMI. A longer tenure typically lowers the EMI, and a shorter tenure increases it.
• Prepayment of loan: Prepaying reduces the principal, which can lower your EMI or shorten your tenure. If the EMI stays the same, more of it goes toward repaying the principal.

In conclusion, understanding how changes in interest rates, loan tenure, and prepayments affect your EMI is crucial for effective financial planning. By employing the EMI calculator, you can keep your repayment schedule in check and make sound financial decisions throughout the duration of your loan.