# EMI calculator

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EMI is the short form for Equated Monthly Instalment. It means exactly what it sounds like – a monthly instalment payment that adds up to a sum that a buyer owes to the seller. Explained in simpler terms, Equated Monthly Instalments are a mechanism of payment devised to improve the affordability of items for the buyers and induce flexibility in payments. EMIs are fixed payments that a buyer or a borrower pays to the seller or lender each month on a fixed date, with or without an interest involved, to pay off the owed amount in full over a while – anywhere between three months to five years (or more, depending upon the principal amount)

Calculating the EMI manually using the formula can be tedious. 5paisa’s EMI Calculator can help you calculate your EMI with ease. 5paisa EMI calculator is an online tool that helps you understand the design of your Equated Monthly Installment. This calculator determines the amount you would be required to deposit at repayment each month, making it easier to make better financial decisions.
For example, If you borrow a sum of ₹5,00,000. The bank fixes the repayment at 10 years, at an interest rate of 7% per annum.
Based on these numbers, the EMI  can be calculated as follows:
EMI = ₹5,00,000 x 0.07 x [ ( 1 + 0.07)^10 / (1 + 0.07)^9 ]
Therefore, EMI = ₹5,805
Thus, you would need to pay ₹5,805 every month for 10 years to square off the loan in EMIs.

5paisa has a very convenient EMI calculator that only needs a few data inputs by you to tell you about your EMI details. You can begin by entering the following details into the online EMI calculator tool on the 5paisa website:
●    The interest rate applicable for your EMI
●    The tenure of repayment of the loan
●    The principal amount of the loan
Using these three details, the EMI calculator on 5paisa will calculate your EMI details and give you information on the following points:
●    The amount of your monthly installment
●    The total amount of interest you would pay during repayment
●    The total amount of principal you would end up paying, including the interest

The principal amount (the loan amount borrowed) and the interest component are typically added together, and the EMI loan amount is then calculated by dividing the total by the borrowing term, or the number of months.

An EMI's make-up can vary from month to month. The interest component of the EMI decreases with loan vintage while the principal repayment component increases.

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

where P is the principal loan amount, r is the monthly interest rate (for example, if the rate of interest is 14% per year, then r = 14/12/100=0.011667), and n is the loan's duration in months.

For instance, if you borrow Rs. 100,000 from the bank for three years (i.e., 36 months) at 14% annual interest, your EMI would be Rs. 100,000 * 0.011667* (1 + 0.011667)^36 / ((1 + 0.011667)^36 - 1) = Rs. 3418.

This indicates that it will take you 36 months to pay back the loan in full by making payments of 3418. Your total repayment will be  Rs. 1,23,039, which is made up of Rs. 1,000,000 in principal and Rs. 23,039 in interest.

When making plans to apply for a loan, there are a few things to keep in mind. You will need to figure out your EMI based on your financial situation and ability to repay. Here are a few things to think about:
- Loan term: A loan's tenure may be shortened or lengthened. There will then be a change in the EMI amount, either up or down. As a result, taking into account a loan's term is another crucial consideration that could impact the amount you owe.
- Rate of interest: In determining the total amount of installments due, the rate of interest is an important consideration. To keep your overall repayment low, compare the products and choose one with a lower interest rate.
- Loan amount: Choosing the loan amount is a crucial element in calculating your EMI. Your EMI will be determined based on the loan amount you select.

When taking out a loan, you can look at various EMI options available and choose the best one that suits your financial situation. There are various EMI calculators available online to help you determine your monthly expenses. Let's see what they are.

### EMI Calculator for Home Loans

The EMIs calculators help you calculate the EMIs on your home loans. You need to input the fields like tenure, interest rate, and principal desired to understand how much a home loan would cost you.

### EMI Calculator for Car Loans

In this EMI calculator option, the borrower can calculate the monthly EMI payments that would be due for the tenure of the car loan he has opted for. Parameters like processing fee and date of payment will also be considered. However, this calculator doesn't consider the down payments you make.

### EMI Calculator for Personal Loans

This type of EMI calculator allows you to gauge your monthly expenses in paying off the personal loan that you avail with a bank. It may also help you calculate your loan eligibility by asking for your job details.

### EMI Calculator for Property Loans

In case you are planning to take a loan out on one of your properties, you will need this EMI calculator to understand and adjust your repayment tenure and monthly EMI accordingly.

## FAQ’s

EMI can be calculated using the reducing balance method and the flat-rate method. In the reducing balance method, the amount of EMI keeps reducing with time. In the flat rate method, the EMI amount stays the same throughout.

5paisa’s EMI calculator tells you the amount of monthly installments you would incur on a loan, the total amount you would end up paying as interest by the end of tenure and the total principal including interest that you would be repaying by the end of tenure.

No, you only need the tenure of loan, the interest rate and principal amount to use the 5paisa’s EMI calculator.

In essence, the 5paisa’s EMI calculator uses the fundamental EMI formula to work out the equated monthly installment - the base data remains the same.