Easy Ways to Calculate EMI for Your Loan - Loan Trivia

## Monday 26 June 2017

Applying for a loan is an important investment decision as it has a significant impact on your finances and savings.If not planned well and in advance, you might as well be relying on your luck for the EMI planning to work itself for your favor. While planning for the most feasible EMI plan for a home, personal or business loan you need to find the best EMI plan that will not burn a hole in your pocket every month.

### Manually, with the help of a calculator by using the formula:

This method consists of two steps:

#### Step 1

The value of R, rate of interest is always given for a year, i.e. it is the rate of interest per annum.
To convert it to the monthly rate of interest-
R
12x100

The value obtained after performing this step has to be input into the EMI formula given below in step 2

#### Step 2

EMI= [PxRx(1+R)N]      where P= Principal amount borrowed as loan
(1+R )N                                R= Rate of Interest per month
N= Number of monthly installments

Must Read: Find Out How Much EMI You Will Have To Pay On Your Personal Loan

### Second Method:

Using a Spreadsheet on Microsoft Excel with the PMT function

All you will have to do here is use the right values for the three variables namely-

Rate- Rate of Interest,
Nper- Number of Periods
Pv- Loan Value or Present Value

Note- Here again, it needs to be remembered that the rate of interest will be the  rate of interest to be charged per month and not annually as EMI is calculated for a month.

### Third Method:

Using an EMI calculator Available Online

There are three types of online EMI calculators available which can give you an estimate of the EMI to be debited every month. You will have to feed in the correct details in the respective fields for loan amount, rate of interest and the tenure. Once all the details are filled in, the calculator will display the EMI.

a.) Use a Personal Loan Online EMI Calculator:

is very easy to operate, you just need to feed the following values:
• Loan Amount
• Tenor (in months)
• Rate of Interest
As shown in the figure below:

b.) Home Loan EMI Calculator:

You can easily calculate monthly EMI with the help of Online Home Loan EMI Calculator by filling the following values in the respective fields:
• Loan Amount
• Tenor (in months)
• Rate of Interest
As shown in the figure below:

Calculate EMI for Business Loan within a few simple clicks using Business Loan EMI Calculator by filling the following values.
• Loan Amount
• Tenor (in months)
• Rate of Interest
As shown in the figure below:

### Tips For Easy and Correct EMI Calculation

• Relying solely on the first manual method is not advisable as these calculations are always tedious unless you enjoy doing complex math.
• Moreover, doing the calculation manually is not the best option as it is more prone to errors and unless you are very confident of yourself, you should opt for the Excel spreadsheet or an online EMI calculator.

### Finding the Right Loan is Important

• You need not be very knowledgeable about loan terms and interest rates in order to make a good and informed decision.
• Depending on the purpose of applying for a loan, you ought to look at the various loan options available with banks and Non-Banking Financial Companies. For example, if you want to go abroad for a Master’s Degree, you can apply for an education loan or a personal loan.
• The next step should be comparing the schemes and interest rates of various money lending institutions to compare the EMI plans. This is where a lot of people falter.
• On reaching this stage, compare all available options to find the loan and EMI plan that suits your needs the best. You can check online on PaisaBazaar or BankBazaar to get a thorough look at all the possibilities and also compare them to filter out the most feasible options from the rest.
• Here, you should take a comprehensive look at the loan schemes and not just the interest rates offered. This means that you should factor in other important aspects like EMI waivers, hidden costs, and exclusive benefits offered by the bank or NBFC apart from an attractive rate of interest.
• Then, you should start by checking the EMI for the selected loans on the EMI calculator. You can either check on the respective website of the bank or NBFC as most of them have their own EMI calculating tool. If they do not have one, you can use a generic one easily available online.
• It is best to use an EMI calculator of the respective site or of a website which has sufficient authority in the market.