Understanding EMI and How to Calculate It
EMI stands for Equated Monthly Installment. It is a fixed sum of money that a borrower pays to a lender on a specified date each month. EMIs are commonly used for home loans, car loans, personal loans, and other types of loans. The EMI amount includes both the principal repayment and the interest charged on the loan.
The calculation of EMI is based on a formula that considers the principal loan amount, the annual interest rate, and the loan tenure (the duration over which the loan needs to be repaid). The formula ensures that the loan is paid off completely by the end of the tenure with a consistent monthly payment.
The EMI Formula
The standard formula for calculating EMI is:
EMI = P × r × (1 + r)n / ((1 + r)n - 1)
Where:
P = Principal Loan Amountr = Monthly Interest Rate (Annual Interest Rate / 12 / 100)n = Loan Tenure in Months
How the Calculator Works
Our EMI calculator simplifies this process. You just need to enter the following details:
- Loan Amount (₹): The total sum you wish to borrow.
- Annual Interest Rate (%): The yearly interest rate applicable to your loan.
- Loan Tenure (Months): The total number of months you plan to repay the loan.
Once you click "Calculate EMI," the calculator will automatically compute your Equated Monthly Installment and display it. It also helps in understanding the total interest payable and the total amount to be repaid over the loan's lifetime.
Example Calculation
Let's say you want to take a loan of ₹5,00,000 with an annual interest rate of 8.5% for a tenure of 10 years (120 months).
- Principal Loan Amount (P) = ₹5,00,000
- Annual Interest Rate = 8.5%
- Monthly Interest Rate (r) = 8.5 / 12 / 100 = 0.0070833
- Loan Tenure (n) = 10 years * 12 months/year = 120 months
Using the formula:
EMI = 500000 * 0.0070833 * (1 + 0.0070833)120 / ((1 + 0.0070833)120 - 1)
This calculates to approximately ₹6,273.
The calculator will help you quickly determine this EMI and explore different loan scenarios.
function calculateEMI() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTenureMonths = parseFloat(document.getElementById("loanTenureMonths").value);
var resultDiv = document.getElementById("result");
resultDiv.innerHTML = ""; // Clear previous results
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTenureMonths) || loanAmount <= 0 || annualInterestRate < 0 || loanTenureMonths <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = annualInterestRate / 12 / 100;
var emi;
if (monthlyInterestRate === 0) {
emi = loanAmount / loanTenureMonths;
} else {
emi = loanAmount * monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTenureMonths) / (Math.pow(1 + monthlyInterestRate, loanTenureMonths) – 1);
}
var totalInterestPayable = (emi * loanTenureMonths) – loanAmount;
var totalAmountPayable = emi * loanTenureMonths;
resultDiv.innerHTML =
"
₹" + totalAmountPayable.toFixed(2) + "";
}
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