EMI FAQs Home Loan, Personal Loan, Education Loan, Car Loan, Gold Loan etc.

Formula of EMI calculation:

where

E is EMI

P is Principal Loan Amount

r is rate of interest calculated on monthly basis. (i.e., r = Rate of Annual interest/12/100. If rate of interest is 10.5% per annum, then r = 10.5/12/100=0.00875)

n is loan term / tenure / duration in number of months

For example, if you borrow ₹10,00,000 from the bank at 10.5% annual interest for a period of 10 years (i.e., 120 months), then EMI = ₹10,00,000 * 0.00875 * (1 + 0.00875)¹²⁰ / ((1 + 0.00875)¹²⁰ – 1) = ₹13,493. i.e., you will have to pay ₹13,493 for 120 months to repay the entire loan amount. The total amount payable will be ₹13,493 * 120 = ₹16,19,220 that includes ₹6,19,220 as interest toward the loan.

Computing EMI for different combinations of principal loan amount, interest rates and loan term using the above EMI formula by hand is time consuming, complex and error prone. Our EMI calculator automates this calculation for you and gives you the result in a split second along with visual charts displaying payment schedule and the break-up of total payment.

1.Loan Amount

Describes the maximum amount that a borrower can borrow. The maximum loan amount is based on a combination of different factors involving the specific loan program, the value of the property that secures the loan and the borrower's qualifying ratios and credit history.

2.Interest Rate

An interest rate, is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed interest rate is the amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

3.Loan Tenure

A fine balance between EMI amount and Home Loan Tenure. A home loan helps you realize your dream of having your own home. A home loan comes with its own financial commitment, in the form of EMI (Equated Monthly Installments) that has to be serviced by you diligently over the tenure of the loan.

4.EMI

EMI stands for Equated Monthly Installment
It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.

Floating Rate v/s Fixed Rate

Floating Rates or floating interest rates, the EMIs would fluctuate as per the market dynamics as interest rate increases or decreases. On the other hand for Fixed rate of interest on a loan would mean that the equated monthly installments or EMIs would remain constant over the tenure of the loan

CIBIL

TransUnion CIBIL Limited (Formerly: Credit Information Bureau (India) Limited) is India's first Credit Information Company (CIC) founded in August 2000. TransUnion CIBIL collects and maintains records of an individual's payments pertaining to loans and credit cards.

Repo Rate

Repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds. Repo rate is used by monetary authorities to control inflation

Reverse Repo Rate

Reverse repo rate is the rate at which the central bank of a country (Reserve Bank of India in case of India) borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country.