Planning to take a loan? An EMI Calculator helps you understand your monthly repayment obligations in advance, so you can borrow smartly and manage your finances with confidence.
What Is EMI Calculator?
An EMI Calculator is a simple online tool that helps you quickly determine the equated monthly instalment (EMI) for your loan. By using aspects such as loan amount, interest rate, loan tenure, it helps you to get a clear picture of your repayment schedule. Whether you’re applying for a home loan, car loan, personal loan, or education loan, the EMI Calculator eliminates guesswork and complex manual calculations, thus allowing you to make informed borrowing decisions.
How Can EMI Calculator Help You?
The ClearTax EMI calculator enables you to calculate your monthly instalments instantly, thus ensuring transparency to the borrowing process. By offering a clear breakdown of your principal and interest components, the EMI calculator saves time, eliminates manual errors, and supports smarter financial planning.
EMI Calculator Formula
The EMI Calculator’s formula is based on reducing balance interest calculations, as given below:
EMI = [P * r * (1 + r)^n]
[(1 + r)^n – 1]
Where,
- EMI = Equated Monthly Instalment
- P = Loan principal amount
- r = Monthly interest rate (annual interest rate divided by 12)
- n = Loan tenure in months
EMI Calculator Example
Let us assume that Mr. A wishes to borrow INR 500,000 for five years at an interest rate of 10% annually. The Clear Tax calculator can be used to find Mr A’s monthly EMI, by assuming the following components:
- Amount desired for loan (P) INR 500,000
- Rate of interest (r): 10%/12 = 0.008333
- Duration (n): 5 years
Using the formula, the EMI can be calculated as follows:
EMI = [P * r * (1 + r)^n]
[(1 + r)^n – 1]
EMI = 500000 x 0.008333 x (1+0.008333)^5
(1+0.008333)^(5-1)
At 10% interest per year, a Rs.500,000 desired loan would yield about Rs.10,624 every month.
