EMI Calculator for Personal Loans
Understanding Your Personal Loan EMI
A Equated Monthly Installment (EMI) is a fixed amount that you pay to your lender every month on a specific date for the duration of your personal loan. This EMI includes both the principal amount (the original loan amount) and the interest charged by the lender. Understanding how your EMI is calculated is crucial for budgeting and financial planning.
How is EMI Calculated?
The formula used to calculate the EMI for a loan is as follows:
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
Key Components of Your EMI
- Principal Amount (P): This is the total amount of money you borrow from the lender.
- Interest Rate (r): This is the rate at which the lender charges interest on the outstanding loan amount. It's usually quoted as an annual percentage rate (APR), but for EMI calculation, it needs to be converted to a monthly rate.
- Loan Tenure (n): This is the total period, usually in months, over which you agree to repay the loan. A longer tenure generally means a lower EMI but a higher total interest paid over the loan's life.
Why Use an EMI Calculator?
An EMI calculator simplifies this calculation process. By inputting the loan amount, annual interest rate, and loan tenure, you can instantly get an estimate of your monthly repayment amount. This tool is invaluable for:
- Budgeting: Knowing your EMI helps you determine if the loan fits within your monthly budget.
- Loan Comparison: You can compare EMIs for different loan offers from various lenders with varying interest rates and tenures.
- Financial Planning: It allows you to plan your finances effectively, ensuring you can meet your repayment obligations.
Example Calculation
Let's consider an example:
- Principal Loan Amount (P): ₹ 500,000
- Annual Interest Rate: 12%
- Loan Tenure: 60 months
First, we calculate the monthly interest rate (r):
r = (12% / 12) / 100 = 0.01
Now, we can plug these values into the EMI formula:
EMI = 500,000 * 0.01 * (1 + 0.01)^60 / [(1 + 0.01)^60 – 1]
EMI = 500,000 * 0.01 * (1.8166966986) / [1.8166966986 – 1]
EMI = 5000 * 1.8166966986 / 0.8166966986
EMI = 9083.483493 / 0.8166966986
EMI ≈ ₹ 11,122
This means for a loan of ₹ 500,000 at 12% annual interest for 60 months, your monthly EMI would be approximately ₹ 11,122. The total interest paid over the loan tenure would be (11,122 * 60) – 500,000 = ₹ 167,320.
function calculateEMI() {
var principalAmount = parseFloat(document.getElementById("principalAmount").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(principalAmount) || isNaN(annualInterestRate) || isNaN(loanTenureMonths) || principalAmount <= 0 || annualInterestRate <= 0 || loanTenureMonths <= 0) {
resultDiv.innerHTML = "Please enter valid positive numbers for all fields.";
return;
}
var monthlyInterestRate = (annualInterestRate / 12) / 100;
var tenureInMonths = loanTenureMonths;
var emi = principalAmount * monthlyInterestRate * Math.pow(1 + monthlyInterestRate, tenureInMonths) / (Math.pow(1 + monthlyInterestRate, tenureInMonths) – 1);
var totalInterest = (emi * tenureInMonths) – principalAmount;
var totalPayment = emi * tenureInMonths;
resultDiv.innerHTML =
"
Your Monthly EMI: ₹ " + emi.toFixed(2) + "" +
"
Total Interest Payable: ₹ " + totalInterest.toFixed(2) + "" +
"
Total Payment (Principal + Interest): ₹ " + totalPayment.toFixed(2) + "";
}
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