Loan Amount

Interest Rate (p.a)

%

Tenure (years)

EMI Calculator

In the year 2022, the YOY growth of the bank loan industry was close to 15%. While the overall growth of the credit market stood at 11.1% in the same year. This depicts the higher demand for credit facilities in the country and it is bound to grow as the economy is growing as one of the top economies of the world. However, availing of credit facilities means binding yourself to a monthly EMI payment scheme. So, if you are thinking of availing of a loan or any form of credit facility where you have to repay the borrowed amount in the form of equated monthly instalments, you need to plan it thoroughly so that the EMIs don’t become a burden on your pocket. Here the EMI calculator can be your saviour as it can help you quickly analyze your EMIs.

Thus, in this article, you will read about the emi calculator online in detail and the following will be covered in this article -

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What is EMI?

When you avail of any loan be it a home loan, car loan, personal loan or any other loan, or for that matter other kinds of credit facility, you need to repay the amount within a stipulated period. Now this repayment procedure takes place in parts and when the amount borrowed is paid in equal parts over a certain number of months, it is called Equated monthly instalments or EMI.

This can be easily understood by a simple example. Suppose, you want to buy your first car but you have around Rs. 3 lakhs in your savings while the car you like will cost you around Rs. 7 lakhs. Being a wise person, you would choose to avail of a car loan by making a down payment of around Rs. 2 lakhs so that Rs. 1 lakh still be there in your savings account for contingencies. So, the total amount due after the down payment will be Rs. 5 lakhs. If the interest rate on your car loan is around 10% and the tenure for the loan is supposedly 8 years, then the loan emi will be Rs. 7587. This can be calculated as –

What is an EMI calculator?

In the above section, you just saw how EMIs can be calculated using Excel or manually, and here comes an EMI calculator which can do the same thing and give more accurate results within a blink of an eye. So, a loan emi calculator is nothing but an online tool used for calculating the EMIs of different loans in a few seconds. The calculator requires a few inputs from your end such as the amount of loan, interest rate and loan tenure and then it will calculate on its own and provide you with the result.

You can find different emi calculators online like Bharti Axa Life’s emi calculator or similar ones and you can use this calculator for free. So, if you are about to avail of a loan, and compare different options you have, it is time to quickly calculate the emi of the different loan options to choose the right one for yourself.

What are the types of EMI Calculators?

Now you know there is a monthly emi calculator which can help you find the EMIs of your loan easily, but for which loan? Are there different EMI calculators for different loans? Yes, there are different EMI calculators for different types of loans that one can avail of. Let’s know about the most common EMI calculators here –

Personal Loan EMI Calculator

Personal loans are often taken during cash crunch or for emergencies and even for some big events. However, whether availing the personal will be wise or not can be found using a personal loan repayment calculator. This will help you analyse how much you have to pay per month as EMI against the personal loan you are taking. Then you can evaluate whether the EMI amount will hurt your pocket or not and your monthly budget and investments too.

Home Loan EMI Calculator

Home Loan EMI calculators are one of the most popular EMI calculators as the loan amount for home loans is huge, the borrowers always try to evaluate, and compare multiple loan offers using the home emi calculator. These calculators can be used easily just by entering the loan amount you are availing for the home deducting the down payment you are making, the interest rate and the repayment tenure. Usually, home loan repayment tenure is between 15 years to 20 years while the loan amount varies from Rs. 10 lakhs to crores. You can change the loan amount, and interest rate compare different home loan offers you have in your hand.

Car Loan EMI Calculator

The next most popular online loan calculator is the car loan EMI calculator. So, when you avail of a car loan, the down payment is usually around 20% to 40% of the total amount of the car. So, you need to deduct the amount of the down payment from the price of the car and the remaining will be used for EMI calculation. A car loan repayment calculator can help you find out the best offer you have from different car loan lenders.

There are other EMI calculators too such as education loan EMI calculator or loan against property calculator, however, the basic nature of all these calculators remains the same. This brings us to the next section of this article that how these emi calculators work.

How do EMI Calculators work?

So, whether it is a home loan EMI calculator or a car loan or any other loan for that matter, the basis of the EMI calculation remains the same.

The formula used to derive the EMI of any loan which is also used by this calculator is as follows – EMI = P * R * (1+R)^N / {(1+R)^N-1}

Here,

• p

loan amount (excluding the down payment)

• n

loan tenure in months

• r

Monthly Rate of Interest

In case the interest rate is given in per annum then you need to divide the same by 12.

icon

Let’s understand with an example
So, according to the formula

• p

Rs. 500000

• n

8*12 = 96 months

• r

10%/12 = 0.0083

Therefore,

How to use the EMI calculator?

So, now as you know the underlying equation that runs the emi calculator thus, it will be easier for you to use the calculator as well. If you are wondering how to calculate emi and how to start using the emi calculator online, then it is pretty simple. All you need to do is to enter certain values which are the variables mentioned in the above formula only.

You need to enter the amount of the loan, then the interest rate and the number of years for which you have taken the loan. You might be wondering, then what difference will an EMI calculator will make when one needs to enter all these variables? The answer is simple and that you do not have to manually calculate the per-month interest rate, you can just enter the per-annum rate like 10% in the above example, then you do not need to multiply the tenure by months to find out the number of months you will be repaying the loan. All these will not only save you time but also help you find a more accurate result.

What is the importance of an EMI Calculator?

The primary importance of the loan emi calculator online is helping you quickly find the EMIs of different loan options so that you can pick the loan that is most suitable for you. Using this calculator can –

• Increase your chances of getting a loan as you will be applying for those loans which are within your budget as you already know the amount of EMI that you have to pay in the future.

• Once you know the EMI of your loan, you can also evaluate whether your debt-to-income ratio is going over the top or not. Lenders usually reject loan applications where the debt-to-income ratio is too high. You need to keep your EMIs, within 50% of your monthly income. So, if you already have some loans running, using the emi calculator online you can calculate whether your total EMI will be higher than 50% of your income or not and thus save yourself for making an application that will get rejected.

• This in turn helps in securing your credit score. As you may know, when lenders reject your loan application and you apply for multiple loans, then your credit score goes down. So, if you use the calculator to evaluate first and then apply for the loans wisely, then the chances of rejection will reduce and thus, your credit score will not be adversely affected.

• It saves you time and effort as EMI calculation is quite complex when done using a normal calculator or even with Excel, especially if you do not come from a finance professional.

What are the factors that can impact your EMI amount?

As you know by now, the three crucial factors that can impact your EMIs are –

Loan amount

The higher the amount of the loan, the higher will be the EMI. You can use the instalment calculator to find out EMIs for the different loan amounts. These calculators let the user change the loan amount multiple times and thus you can check for any loan amount.

Interest rate

The second factor that impact the EMI amount is undoubtedly the interest rate. If there are two loans of the same amount and loan tenure but one with a different interest rate, then the one with a higher interest rate will be more expensive and thus, the EMIs will be higher while the one with having lower interest rate will have lower EMIs. However, this can be altered by changing the repayment tenure or loan amount. You can increase or decrease the interest rate in the loan emi amount calculator to find out how the EMIs change when the interest rate change. This can help you evaluate loans offered by different lenders asking for different interest rates.

Loan tenure

Finally, the repayment tenure which is the number of years for which you will be repaying the loan is the loan tenure. This also affects the EMIs longer tenure will reduce your EMIs while shorter tenure will increase them, given the loan amount and the interest rate is the same. Using the emi calculator you can find out the EMI for different tenures and choose the one that will be suitable for you. However, you need to keep in mind, when you increase the tenure, the total amount of interest paid also increases but not the EMI.

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How are EMIs calculated on loans with a floating interest rate?

While using an emi calculator the interest rate is usually fixed. However, there are loans where a floating rate of interest is required to be calculated. So, how will you do that? You can do it in three ways, one by using the physical calculator, especially if you have a financial one, or Excel, or using a loan emi calculator.

However, again the basis of the calculation will remain the same. To understand this, let’s first understand how the floating rate is calculated.

So, the floating rate is derived from two components – one is fixed while the other one is variable. The floating rate is linked to the Marginal Cost of Funds Based Lending Rate or MCLR, prevailing in the economy. This is the minimum interest rate which is decided by the central bank of the country and no lender can lend at an interest rate below this. This rate is altered by the RBI as per their regulations, economic conditions and other factors. Thus, this is the variable part of the floating rate. Now, lenders, keeping their share of the profit margin add a certain rate to the MCLR and that becomes the interest rate for a loan. For instance, the MCLR is 6% and the lender keeps 4% for themselves so the rate of the loan becomes 10% in total. Now if the MCLR changes to 7%, the interest rate will become 11% while if the MCLR decreases to 4%, the interest rate will become 8%.

Thus,

Floating rate = MCLR + interest rate of the lender

Now, to calculate the EMI, you need to calculate individually for the stretch when the interest rate remained the same. By using the emi calculator this can be done most easily and also quickest too. All you need to divide the tenure exactly according to the change in the MCLR and change the interest rate and the remaining loan amount.

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Frequently Asked Questions about EMI

Can I calculate home loan EMI using an EMI calculator?

Yes, you can calculate home loan EMI, as well as EMI for any loan using the emi calculators online.

Do I need to open an account to use the EMI calculator?

No, you do not need to open an account, all you need to do is to visit the emi calculator online and input the variables – loan amount, interest rate and loan tenure to find out the EMI.

Are these EMI calculators free to use?

Yes, these emi calculators are completely free to use. There is no charges or subscription fee for the same.

Disclaimer

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