In order to calculate EMI you will have to enter the total loan amount which you want to borrow, time
duration of the loan, and the interest rate. The basic formula to calculate EMI is -
EMI = P x r x (1+r)^n/((1+r)^n -1)
The above variables stands for -
P stands for the amount that you want to borrow.
R stands for the rate of interest applicable on the loan amount on a monthly basis.
N stands for the tenure of the loan repayment.
Let us take an example to understand the EMI calculations in a better way,
Say, you have taken a personal loan of Rs. 4 lakhs for 3 years at an interest rate of 20% p.a.
Firstly, we need to convert the annual rate of interest into a monthly rate & also the loan tenure into
months.
To calculate the monthly interest rate, we have to divide the annual interest rate by the number of
months in a year, i.e. 20/12 =1.66% per month
The 3-year loan tenure must also be converted into months before putting it into the formula i.e. 36
months
Now we have the three variables with us which we can integrate into the formula as follows -
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