EMI Calculator

EMI:

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Equated Monthly Installment

Background Information

What does EMI mean?: A money lender gives a specific amount of money to the borrower with a condition that the amount borrowed is paid back with interest as monthly installments. These installments are given over a predetermined period of time by the borrower and are referred to as EMI.

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EMI FINANCE INTEREST

Formula

EMI = `p * (r / 100 / 12) * ((1 + r / 100 / 12) ^ n) / ((1 + r / 100 / 12) ^ n - 1)`

Where:-

p = loan amount
r = annual interest rate
n = loan tenure months

Example

A person took a personal loan of Rs. 4000000 for 240 months at an interest of 10% p.a. Divide the annual interest rate by the number of months in a year, i.e. 12, so monthly 20/12 = 1.66% per month. Now the 2-year loan tenure should be converted into months before integrating into the above formula i.e. 24 months.

According to the above formula:-

`p * (r / 100 / 12) * ((1 + r / 100 / 12) ^ n) / ((1 + r / 100 / 12) ^ n - 1)`
`4000000 * (10 / 100 / 12) * ((1 + 10 / 100 / 12) ^ 240) / ((1 + 10 / 100 / 12) ^ 240 - 1)`
`4000000 * (0.1 / 12) * ((1 + 0.1 / 12) ^ 240) / ((1 + 0.1 / 12) ^ 240 - 1)`
`4000000 * 0.0083 * ((1 + 0.0083) ^ 240) / ((1 + 0.0083) ^ 240 - 1)`
`33333.34 * (1.0083 ^ 240) / (1.0083 ^ 240 - 1)`
`33333.34 * 7.3281 / (7.3281 - 1)`
`244268.6781 / 6.3281`
EMI = `38,600.8804`

Updated: Nov 5, 2018

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