Loan EMI Calculator

EMI stands for Equated Monthly Installment. It's the fixed amount that a borrower pays to a lender at a specified date each month until the loan is fully repaid. Each EMI payment consists of two parts: the principal amount and the interest amount.

The principal is the original loan amount that you borrow, while the interest is the cost of borrowing charged by the lender. The beauty of an EMI is that it remains constant throughout the loan tenure, making it easier for borrowers to plan their finances.

The mathematical formula used to calculate EMI is:

EMI = [P × R × (1+R)^N]/[(1+R)^N-1]

Where: P = Principal loan amount R = Monthly interest rate (annual rate ÷ 12 ÷ 100) N = Total number of monthly installments (loan tenure in months)

For example, if you take a loan of $100,000 at an annual interest rate of 8% for a period of 5 years (60 months), your EMI would be approximately $2,028 per month.

Several factors influence the amount of EMI you'll pay:

1. Loan Amount: The higher the loan amount, the higher your EMI will be.

2. Interest Rate: Even a small difference in interest rate can lead to substantial changes in your total repayment amount.

3. Loan Tenure: Extending your loan tenure reduces your EMI amount but increases the total interest paid over the life of the loan.

4. Type of Interest Rate: Fixed rates remain constant throughout the loan tenure, while floating rates change based on market conditions.