Understanding Equated Monthly Installments (EMI)
An Equated Monthly Installment (EMI) is a fixed amount that is paid by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal amounts over the duration of a loan. The EMI amount remains constant throughout the loan tenure, making it easier for borrowers to budget their finances. This calculator helps you determine your EMI for a loan.
How is EMI Calculated?
The EMI is calculated using the following formula:
EMI = P × r × (1 + r)^n / ((1 + r)^n – 1)
Where:
- P = Principal Loan Amount
- r = Monthly Interest Rate (Annual Interest Rate / 12 / 100)
- n = Loan Tenure in Months
Example Calculation
Let's consider a loan of ₹5,00,000 with an annual interest rate of 10% for a tenure of 5 years (60 months).
- Principal Loan Amount (P) = ₹5,00,000
- Annual Interest Rate = 10%
- Monthly Interest Rate (r) = 10% / 12 / 100 = 0.008333
- Loan Tenure (n) = 5 years * 12 months/year = 60 months
Using the formula:
EMI = 500000 × 0.008333 × (1 + 0.008333)^60 / ((1 + 0.008333)^60 – 1)
EMI ≈ ₹10,623
This means you would pay approximately ₹10,623 every month for 60 months to repay the loan.
Benefits of Using an EMI Calculator
- Planning: Helps you understand your borrowing capacity and plan your monthly expenses.
- Comparison: Allows you to compare different loan offers by calculating EMIs for varying amounts, interest rates, and tenures.
- Transparency: Provides a clear picture of your repayment schedule and the total interest paid over the loan's life.
function calculateEMI() {
var loanAmount = parseFloat(document.getElementById("loanAmount").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var loanTenureMonths = parseFloat(document.getElementById("loanTenureMonths").value);
var resultElement = document.getElementById("result");
resultElement.innerHTML = ""; // Clear previous results
if (isNaN(loanAmount) || isNaN(annualInterestRate) || isNaN(loanTenureMonths) || loanAmount <= 0 || annualInterestRate < 0 || loanTenureMonths <= 0) {
resultElement.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = annualInterestRate / 12 / 100;
var numerator = loanAmount * monthlyInterestRate * Math.pow(1 + monthlyInterestRate, loanTenureMonths);
var denominator = Math.pow(1 + monthlyInterestRate, loanTenureMonths) – 1;
if (denominator === 0) {
resultElement.innerHTML = "Calculation error. Please check input values.";
return;
}
var emi = numerator / denominator;
var totalInterest = (emi * loanTenureMonths) – loanAmount;
var totalPayment = emi * loanTenureMonths;
resultElement.innerHTML =
"
Your Monthly EMI: ₹" + emi.toFixed(2) + "" +
"
Total Principal Amount: ₹" + loanAmount.toFixed(2) + "" +
"
Total Interest Payable: ₹" + totalInterest.toFixed(2) + "" +
"
Total Payment (Principal + Interest): ₹" + totalPayment.toFixed(2) + "";
}
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