Mastering the Art of EMI Calculation for Personal Loans: Smart Approaches

A personal loan is a great way to fund unplanned financial expenses. A personal loan is a multipurpose loan that requires minimal documentation such as identity proof, address proof and income proof. Once the required documents are submitted , the personal loan is processed quickly and is disbursed within a day. Before you apply, you need to know a few things about personal loans and one of them is EMI and how to calculate it. In this article, we will explore ways to calculate personal loan EMI.

What Is an EMI?

An equated monthly instalment or EMI is the amount that the borrower has to pay every month to the lender to repay the loan amount borrowed. An EMI has two parts – principal amount and the interest applied on it. EMI is calculated based on the agreed upon interest rate by the lender. For a fixed interest rate personal loan, the EMI remains constant throughout the loan tenure. In case the borrower prepays during the personal loan tenure, then either the tenure or the subsequent EMIs gets reduced. 

Calculating EMI Using the Mathematical Formula 

Using mathematical formulas to calculate personal loan EMI can be a tedious and long process. This is the formula that is used by online personal loan EMI calculators to compute the EMI as well. Kindly note that the loan tenure and interest rate is the main deciding factor when it comes to loan EMI. Higher the rate of interest on the loan, higher the EMI and vice-versa. Likewise,a shorter tenure increases the EMI and vice-versa.

The formula for calculating personal loan EMI is,

EMI = [P x R x (1+R)^N]/[(1+R)^N-1]


P=Principal amount

R=Interest rate

N=Number of instalments

For example: Let us assume that Mr.X has taken a ₹6 Lakh loan for 5 years at 10% p.a. Using the formula mentioned above, the loan amount would be, 

Monthly interest rate =6/(12*100) = 0.005

Tenure in months = 5*12=60

Personal loan EMI = 6,00,000*0.0083(1+0.005)^60/[(1+0.005)^60-1000)]

Personal loan EMI = ₹12,748

What is a Personal Loan EMI Calculator?

The easiest way to calculate your personal loan EMI is by using a personal loan EMI calculator. It is an easy-to-use online tool that can be used to calculate EMI of your personal loan. All you have to do is enter the loan amount, rate of interest and tenure of personal loan. The online calculator will give you the result instantaneously. Since you get clarity on the expenses, you can then easily get a personal loan on Aadhar card.

Benefits of Using a Personal Loan EMI Calculator

Some of the benefits of using a personal loan EMI calculator are:

Saves time: You can calculate EMI of your personal loan within seconds using this calculator and the results of the personal loan EMI calculator are precise to the last digit.

Free to use: The personal loan EMI calculator is easy-to-use and can be used from anywhere around the world at any time. Additionally, this online calculator is absolutely free to use and you can use this calculator as many times as you want. 

Compare various loans: You can use this calculator to check the EMI of various loan schemes and pick one that best suits your financial needs. 

Preferred loan tenure: Personal loan EMI calculators can also help you with choosing a loan tenure. All you have to do is keep the loan amount constant and change the repayment tenure to arrive at an EMI that matches your income flow. 

Provides repayment schedule: The calculator not only calculates EMI but also provides an amortisation schedule of the personal loan. This way, you will get a rough idea how much you will be paying as interest and what the outstanding principal amount will be year-on-year.

Verification of EMI details: You can validate the repayment schedule that is provided by the lender using the EMI calculator. You can also use this calculator to calculate processing fees, if any.

How to Use Personal Loan EMI Calculator

You can calculate the EMI for your personal loan by following the steps mentioned below:


  • Enter the loan amount or use the slider to select
  • Enter the loan tenure or use the slider to choose the value
  • In the next column, enter the interest rate or use the slider

The result will be calculated within seconds and will have details such as EMI payable, total interest, amortisation schedule and total payable amount.

A clear understanding of the loan amount, interest rate, loan tenure and resultant EMI will help you plan your finances better. You can use the personal loan EMI calculator to find out the interest outgo easily and make an informed decision. Make sure you have all the necessary documents handy such as an Aadhar card for getting a personal loan.


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