The EMI (Equated Monthly Installment) allows the Loan holder to increase their purchasing power by repaying the loan monthly. The freedom to repay the loan amount to the lender every month with the added interest over a fixed period.
What is an EMI Calculator?
The EMI Calculator is used to arrive at the EMI payable for the entire loan amount. The EMI Calculator can predict the amount you need to repay to the financer while considering your repayment tenure and the applicable interest rate.
How To Use An EMI Calculator
The EMI Calculator displayed above can be conveniently used to calculate the monthly installments for the repayment of a loan.
The major components used to calculate the EMI for a
Personal Loan include:
The Rate of Interest: An applicant will pay an interest per the Lender policy the interest rate charged for a
Personal Loan range from 10.5% to 22% per annum. Avail of the best deal and check offers for the
Lowest Interest Rates from leading Banks with
Your Loan Advisors.
The Tenure Applied For Repayment: Repayment Tenure allowed for a Personal Loan is from 12 - 60months; in some cases, an extension of up to 72 months.
The Loan Amount Required By The Applicant: The amount issued as a Personal Loan by most financers ranges from ₹ 50k to 40 Lakhs. The Tenure allotted will be according to the applicant's requirement and the Bank's policy.
Calculation of a Monthly EMI Depicted As Per The Example Below:
| Personal Loan Amount |
₹ 300000 |
| Rate of Interest |
12.50% |
| Tenure |
36 months |
| EMI |
10063.09 |
Benefits of an EMI Calculator
Get a suitable EMI
Before applying for credit as a Personal Loan/ Mortgage/Auto Loan, the customer should know the EMI payable as it will directly affect the monthly budget. Therefore, the applicant should easily accommodate this amount with the mandatory expenses and other spending.
The applicant should ensure a balance of the EMI amount in the account before the due date, as a bounce can cost dearly. In addition, once a return of the EMI is recorded can never be erased and will always appear in the credit history and affect the credit rating.
With the help of the EMI Calculator, the applicant can arrive at a comfortable EMI.
Know the Cost of Funds
Adding up the number EMI paid across the allotted Tenure will give you a total of the loan amount paid back with interest to the Financer. If the applicant can pay a higher amount as an EMI, then going for a shorter tenure will lower the cost of funds. As per the illustration below:
Check As Per The Illustration Below:
| Personal Loan Amount |
Rate Of Interest |
Tenure |
EMI |
Total Amount Repaid |
| 3,00,000 |
12.50% |
36 months |
10063.09 |
362268 |
| 3,00,000 |
12.50 |
48 months |
7974.00 |
382752 |
Calculate Eligibility For The Loan Amount
The primary factor for calculating eligibility for the loan amount is the client's income. With the
EMI Calculator reflecting the monthly EMI post entering the loan amount required, the
Rate of Interest, and the Tenure applicable, the applicant can get a fair idea of the Loan's affordability as per the income.
With the help of the EMI Calculator, the loan seeker can ascertain if monthly repayment for the loan amount desired is affordable. Financial capacity for paying the monthly installment is the primary factor for calculating eligibility for the loan amount. Lenders approve a loan amount as per the eligibility factor
Key Factors Influencing The Calculation of an EMI
The Rate of Interest: The Interest Rate is the cost of funds payable for borrowing the loan amount. The interest rate for a
Personal Loan remains fixed for the complete Tenure. Before applying, a credit seeker should survey the market for the best terms, like a lower interest rate for the funds borrowed will directly reduce the monthly installment.
The Tenure For Repayment: This is the period given to the customer for repayment of the amount borrowed with interest. The Tenure allotted is fixed at the time of disbursement of the Loan, according to the repayment capacity of the applicant and the policy of the Bank. If the applicant can afford a higher EMI, the Tenure applicable is shorter or extended if the applicant is comfortable with a lower EMI.
Please Check The Illustration Depicting The Difference in EMI With a Change in The Rate of Interest/Tenure.
| Personal Loan Amount |
Rate of Interest |
Tenure |
EMI |
| ₹ 300000 |
12.50% |
36 months |
10063.09 |
| ₹ 300000 |
12.50% |
48 months |
7974.00 |
| Personal Loan Amount |
Rate of Interest |
Tenure |
EMI |
| ₹ 300000 |
12.50% |
36 months |
10063.09 |
| ₹ 300000 |
13.50% |
36 months |
10180.59 |
Equated Monthly Installment (EMI) FAQ
Why is The EMI So Important?
Calculating the monthly installment is very important as it directly affects the monthly outgoings.
When Should The EMI be Calculated?
The EMI amount to be paid together with the Rate of Interest and Tenure offered should be confirmed when applying.
Can The EMI Change During The Tenure?
The EMI for an unsecured loan remains fixed for the entire Tenure, whereas the EMI for a secured loan fluctuates as per the RBI base rate.
What Happens if the EMI Bounces?
Interest for Non-Payment charged as per the lender policy the return of ECS gets recorded in the Bank statement and the loan Track.
How is The EMI Deducted?
The monthly installment deducted from the borrower account through ECS (electronic clearing system)
What are The Components of an EMI?
The EMI comprises the interest + principal factor details of the same are available in the amortization schedule of the Loan.
How Can The Monthly EMI Be Reduced?
The current EMI can be reduced by opting for a
Balance Transfer of the existing loan the applicant can negotiate for a longer tenure to reduce the current EMI.
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