What is an EMI Calculator?

An EMI Calculator is a utility tool, which helps you to calculate the amount you repay each month towards your loan. You can use the EMI calculator and calculate the EMI amount on a car loan, home loan, bike loan, or a personal loan. You get an idea of the monthly repayments you make towards these loans.

The EMI calculator has three sliders in a box with the loan amount, number of months, and the interest rate. After you fill-up the details using the slider, the EMI calculator shows how much you must pay off each month, to repay the loan within the duration you have selected.

How Does the EMI Calculator Work?

The EMI Calculator's formula is based on reducing balance interest calculation. The EMI Formula can be expressed as:

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

For example, Mr A wishes to borrow INR 500,000 for five years at an interest rate of ten per cent annually. The Clear Tax calculator can be used to find Mr A's monthly EMI.

Calculator inputs for EMI Calculation:

Amount desired for loan: INR 500,000
Rate of interest: 10%
Duration: Five Years

The following outputs will be shown on the calculator when the inputs above are entered:

At 10% interest per year, a 500,000 INR desired loan would yield INR 10,582 approximately every month.

How to Use the ClearTax EMI Loan Calculator?

The ClearTax EMI Calculator is an easy-to-use tool.

1. Visit the ClearTaxInvest page and pick the EMI Calculator from the option of financial tools.
2. You will be asked to input the following details: Principal amount, the rate of interest, and the tenure.
3. Once you enter the three components, the EMI calculator will generate the EMI amount you must pay.
4. You may try different parameters as well to find an EMI option that best suits your financial goals.

Advantages of Using the ClearTax EMI Loan Calculator

Even before you apply for a loan, you must know if you are eligible for the loan. This can be done with the help of an EMI calculator. Calculating your EMIs will help you prepare to make the EMI payments on time. The other benefits of the EMI calculator include:

Accessibility: You can use the EMI calculator anytime, anywhere, and make your budget calculations.

Financial Planning: EMI calculations must be done even before you start applying for your loan. An EMI calculator can help you with this.

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 one of the most common bank loans taken each year. They usually tend to have a large principal and a longer tenure. This is why it is essential to do all your calculations, well before you take a home loan. Our easy-to-use home loan EMI calculator will let you know how much EMI you must pay for the loan amount so that you can have your finances in order before approaching the bank.

Car Loan EMI Calculator

Before buying your dream car, be sure to run the numbers through our car loan EMI calculator. There are many loan schemes available in the market for buying cars, which are quite tempting. However, it is important to remember that if you are unable to pay your car loan amount in full, the bank could repossess your vehicle.

Personal Loan EMI Calculator

Personal loans have become relatively common these days. You get a personal loan for going on a vacation or renovating your house from various banks. We can help you estimate your loan details regarding how much EMI you’ll have to pay to the banks. It is quick and easy with our personal loan EMI calculator

Education Loan EMI calculator

The cost of education is on the rise each year, and if you are planning to send your child for higher education, you may need an education loan. Generally, these loans come with a moratorium period, so that you can start paying off the loan only after the education is complete. You can use our education loan EMI calculator to find out the EMI amount you will have to pay for this loan.

Loan Against Property EMI Calculator

If you have any residential or commercial property or land registered under your name, you can use this as collateral to obtain a loan against property (LAP). These are secured loans, where you pledge the property as security. You can use our Loan Against Property EMI Calculator, to understand how the EMI scheme works.

What is the Loan Amortisation Schedule?

An amortised loan is designed to allow the borrower to pay off the loan in full over a certain time, in equal monthly instalments. Now, the EMI that you pay against the loan you have taken is made up of two parts:

• The bank charges an interest part.
• A principal part is used to repay the original loan amount.

As you keep paying your EMIs, the original principal amount keeps reducing. Over time, the interest on the loan amount decreases and the principal part of your EMI increases. At the end of the tenure, you would have paid off the principal amount in full.

A Loan Amortization Schedule keeps track of this EMI breakup, so you know exactly what portion of your EMI has been used for paying interest and what is used to reduce the principal. This schedule can be very useful in understanding the prepayment of loans and for refinancing if required.

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: Loan interest rates can be fixed, floating, or hybrid. In case of a fixed interest rate, the rate remains the same over the loan period. A floating interest rate is linked to the MCLR (Marginal Cost of Funds Based Lending Rate) and can change multiple times over the loan period. This may change the EMI calculation for your loan. A loan with a hybrid interest rate has a fixed interest rate for a particular duration, after which the MCLR decides the interest rate. The EMI can change even for such loans.

Change in tenure: If you change banks and carry over your loan to the new bank, the tenure of your loan may change in some cases. This will affect your EMI calculation. The EMI can decrease if the tenure increases and vice versa.

Prepayment of loan: If you prepay your loan, the prepayment amount will be deducted from the original principal, effectively reducing your loan amount. If the tenure remains the same, the EMI can either decrease or stay the same. In the latter scenario, the portion of the EMI used for repaying the principal will increase, as the effective interest would be lower than the original calculation.