How does the EMI Calculator work?
An Equated Monthly Installment (EMI) is the fixed amount you pay to a bank or lender every month until your loan is fully paid off. It consists of two parts: the principal repayment and the interest charged on the outstanding balance.
Intelligence Insight: In the initial years of a loan, a larger portion of your EMI goes towards paying the interest, while the principal repayment portion is smaller. Towards the end of the loan tenure, this ratio reverses.
The Formula
EMI = [P x R x (1+R)^N] / [(1+R)^N - 1]
- P: Principal loan amount
- R: Monthly interest rate (Annual Rate / 12 / 100)
- N: Loan tenure in months (Years × 12)