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What is Equated Monthly Instalment (EMI)?

Equated Monthly Instalment, also referred to as EMI, is a fixed amount of money that borrowers pay every month to lenders until their loan is fully repaid. It consists of two components: the principal amount and the interest amount. The principal amount is the money you borrow from the lender, and the interest amount is the charge for using the lender's money. The EMI amount depends on three factors: Amount, Interest rate, and loan tenure/duration.

What is an EMI Calculator?

An EMI calculator helps you calculate your EMI amount for any loan, such as a home loan, car loan, personal loan, education loan, etc. It also helps you compare different loan options and plan your monthly budget accordingly. An EMI calculator can also show you a break-up of total payment into principal and interest components.

How does EMI Calculator Work?
  • An EMI calculator works by using a simple formula:
  • EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
  • where,
  • P = Principal amount
  • R = Interest rate per month (divide the annual interest rate by 12)
  • N = Number of monthly instalments or loan tenure in months
  • For example, if Rahul takes a loan of ₹100000 from a bank at an interest of 10% per annum for 5 years. Here is how the EMI would be calculated.
  • P = ₹100000
  • R = (10/12)/100 = 0.008334
  • N = 5*12 = 60
  • Therefore,
  • EMI = [100000x0.008334x(1+0.008334^60]/[(1+0.008334)^60-1]
  • EMI = 21247.04471 / Month
  • To use Angel One EMI calculator, you need to enter the following inputs:
  • Loan amount:Amount of money that you want to borrow or have already borrowed from the lender.
  • Interest rate:Amount of money that you want to borrow or have already borrowed from the lender.
  • Loan tenure: Amount of money that you want to borrow or have already borrowed from the lender.


How can I reduce my EMI amount?

You can reduce your EMI amount by:

  • Choosing a longer loan tenure: This will reduce your monthly instalment but increase your total interest payable.
  • Choosing a lower interest rate: This will reduce both your monthly instalment and your total interest payable. You can negotiate with your lender or switch to another lender who offers a lower interest rate.
  • Making a higher down payment: This will reduce your principal amount and hence your monthly instalment and total interest payable.

What are the factor that affects individuals EMI eligibility?

EMI eligibility depends on various factors, such as:

  • Income: income determines your repayment capacity and hence your maximum EMI amount. Generally, lenders prefer that your EMI does not exceed 40% to 50% of your monthly income.
  • Credit score: Credit score reflects your credit history and repayment behaviour. A higher credit score indicates a lower risk of default and hence increases your chances of getting a loan at a lower interest rate and higher EMI amount.
  • Existing debts: Your existing debts affect your debt-to-income ratio, which is the percentage of your income that goes towards paying off your debts. A lower debt-to-income ratio indicates a higher surplus income and hence increases your EMI eligibility.

What types of loans can be calculated using an EMI calculator?

EMI calculator can be used for calculating the EMI payments of various loans such as

  • Personal Loan
  • Car Loan
  • Home Loan

What happens if I miss an EMI payment?

If you miss an EMI payment, the lender may charge a late payment fee and penal interest on the outstanding amount.

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