EMI Calculator

What Is an EMI?

EMI refers to Equated Monthly Instalment. The EMI meaning is the fixed amount you pay to your lender every month for the repayment period. Each EMI contains a portion of both the principal (the amount you borrowed) and interest (the cost of borrowing money). EMIs make loan repayment easy and organised, which helps you budget without any uncertainties. 

By entering the desired loan amount, loan tenure, and valid interest rate, the EMI calculator generates the right amount for your EMI. There are different types of EMI calculators available online, so it is important that you choose the right EMI calculator and learn how to use it to compute the accurate amount they have to pay for a loan. 

How Does the EMI Calculator Work?

Loan EMI calculator helps you get an accurate estimate for your EMI so that you can accordingly plan your finances. Note that your debt-to-income ratio should be below 50% to increase your chances of getting your loan approved. 

EMI Calculator helps you save a lot of time. You do not have to do any complex calculations manually, which can be quite tiring and confusing at the same time. 

It avoids the chances of miscalculation, offering you an accurate calculation every time.

What is EMI Calculation Formula? - Calculate Your Monthly Installments

An EMI calculator uses your loan amount, interest rate, and term, to calculate your monthly payment. It works on the following standard EMI Calculation Formula, so you don’t have to calculate yourself:

EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]

Where:

• P is the principal loan amount.
  
  

• R is the interest rate applicable monthly.
  
  

• N is the total number of monthly payments.

This is the EMI calculator formula used by different loan calculators. 

Understand EMIs Using Real Examples

Let us take a look at how loan type, rate, and term affect monthly payments with the following examples:

What are the Different Types of Loans You Can Calculate EMIs For?

Even though the calculation method is the same, EMI amounts vary based on loan type due to different interest rates and tenures:

Home Loan EMI Calculator

• Tenure: Typically 15–30 years

• Interest rate: Often 8% to 10% (approx.)

• EMIs are lower compared with other loans because of longer tenure

Car Loan EMI Calculator

• Tenure: Usually 3–7 years

• Interest rate: Around 8.5%–11% (approx.)

• Suitable for vehicle purchases without full payment

Personal Loan EMI Calculator

• Tenure: 1–5 years

• Interest rate: 10%–16% (approx.)

• No collateral needed, but higher interest than secured loans.

Education Loan EMI Calculator

• Tenure: Often 5–15 years with possible waiting period

• Interest rate varies by bank and student profile.

Loan Against Property EMI Calculator

• Tenure: 10–15 years

• Used for business needs or large expenses.

How to Use the EMI Calculator? 

Here is how you can use the monthly EMI calculator in India:

Step 1: Visit the EMI calculator page of Policybazaar

Step 2: Go to the widget and fill in the required information

Step 3: Enter your loan amount, interest rate, and tenure to check:

• Your monthly EMI

• Total interest payable over the loan period

• Total amount payable (principal + interest)

What are the Benefits of Using an EMI Calculator?

Before borrowing any loan, you should understand is your monthly commitment. An EMI calculator helps you see how much you would have to pay each month, even before you speak to a bank or lender. Using an EMI calculator is beneficial because of the following reasons:

• Accurate Results: It shows your exact monthly EMI based on the loan amount, interest rate, and tenure you enter, without you having to work through the complex EMI Calculation Formula.

• Make Customisations: It lets you try different combinations of tenure and interest rate so you can see what fits comfortably into your monthly budget.

• Check Total Interest: The monthly EMI calculator helps you understand how much interest you will end up paying over the full loan period, not just the amount you borrow.

• Get an Affordable Loan: It prevents you from getting a loan that looks affordable initially but becomes difficult to manage month after month.

• Better Financial Decisions: It gives you confidence in your decision because you know your repayment plan before you apply for the loan.

What are the Factors that Can Affect Your EMIs?

The following factors affect your EMIs:

• Loan amount: The bigger the loan amount you choose, the higher your monthly EMI will be. Since you are borrowing more, both the repayment and the interest increase accordingly.

• Interest rate: A small change in the interest rate can change your EMI and the total amount you pay back over time. A lower interest rate will lower the amount you have to pay each month and the total amount of the loan.

• Tenure: Choosing a longer term can reduce your EMI and make monthly payments easier, but it also means you pay more interest over the complete loan term.

• Credit score: A good credit score improves your chances of getting a loan at better interest rates. With a stronger score, lenders see you as a lower-risk borrower and may offer more favourable terms.

What are Important Tips for Choosing the Right EMI?

Match with your income: Check to see that the EMIs fit comfortably into your monthly budget.
Avoid over-borrowing: Choose a loan amount that is in line with to your repayment capacity.
Factor other costs: Check the processing fees, insurance, and prepayment charges.
Check prepayment options: Partial repayments can decrease the total interest over time

These habits help you use EMIs responsibly and keep your finances balanced.

Why is it Important to Get Life Insurance When Getting a Loan?

A monthly EMI calculator can help you plan your monthly payments, but it won't protect your family if something unexpected happens. This is when life insurance comes in.

• Protect Your Loan Payments: If you have a home loan, personal loan, or any other type of big loan, a life insurance policy can protect your family from having to pay EMIs in your absence.

• Protect Your Family's Financial Future: A term life insurance policy can help your family keep living the way they do and pay their bills.

• Peace of Mind: You can easily borrow money without worrying about anything because you know your family is safe, even in case of your unfortunate demise, allowing you to plan for your long-term financial security.

Both home loan insurance and term life insurance combined, provide double protection to people with home loans. The loan is paid off, and your family also gets money to help with other needs.

Wrapping it Up!

An EMI calculator is a financial planning tool that brings clarity to your loan decisions. It allows you to instantly see what your monthly commitment will be, compare different loan scenarios, and choose terms that work best with your financial goals. Before finalising any loan, always use the monthly EMI calculator to estimate your payments and plan your budget responsibly.