We were in the Process of Updating the current site thats why we have not published any post for last few weeks. We really appreciate your feedback and continuous support to this site . Here we are presenting you a post on EMI (Equated Monthly Installment). Being a Banker and if your are specially working in Credit Processing, you have to deal frequently with this term. We are also presenting you EMI Calculators so that you can download the same from here by which u can calculate EMI for Home Loan, Car Loan & Personal Loan easily.
Equated Monthly Installment – EMI for short – is the amount payable every
month to the bank or any other financial institution until the loan
amount is fully paid off. It consists of the interest on loan as well as
part of the principal amount to be repaid. The sum of principal amount
and interest is divided by the tenure, i.e., number of months, in which
the loan has to be repaid. This amount has to be repaid monthly. The
interest component of the EMI would be larger in the initial months and
gradually reduce when compared to the principal amount. The exact
percentage allocated towards payment of the principal depends on the
interest rate. Even though your monthly EMI payment won’t change, the
proportion of principal and interest components will change with
time. With each successive payment, you’ll pay more towards the
principal and less in interest.
The formula to calculate EMI:
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.
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 formula
by hand is time consuming, complex and error prone. Therefore we are providing you 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.
Download EMI Calculators:
Feedback on this post is always welcome.
Team Finacle Commands
