# Emi Calculator – How is EMI Calculated?

Am sure a lot of people do not know what the Home Loan EMI calculator is all about. But in this article, you will get all the information that you need. EMI calculator is a basic calculator that helps you to calculate the EMI, monthly interest, and monthly reducing balance. This is done on the basis of the principal amount, loan tenure, and interest rate. The home loan amount is 50, 00,000 while the interest rate is 7.5.

The full meaning of EMI is Equated Monthly Installment and it is the amount payable every month to the bank or any other financial institution until the loan amount is paid fully. The home loan EMI calculator consists of the interest on the loan including the principal amount to be repaid.

However, with a personal loan EMI calculator, the sum of principal amount and interest is divided by tenure. This includes the number of months in which the loan will be paid back. The interest component of the EMI would be larger during the initial months and gradually reduce with each payment.

## How is EMI Calculated?

The mathematical formula to calculate EMI is EMI=P x r x (1 + r) n/ (1 + r) n – 1). P stands for loan amount, r stands for interest rate and n stands for tenure in numbers of months. EMI calculator payments are directly proportional to loan amount and interest rates and they are inversely proportional to the tenure of the loan. The higher the loan amount or interest rate, the higher is the EMI payments and vice versa.

### How to Use loan EMI Calculator

EMI calculator is very easy to use given the fact that you can make use of colorful charts and instant results. Aside from that it is easy to understand and you can quickly perform it. to make use of the calculator you have to enter the information below.

• Loan terms (months or years)
• The principal loan amount you wish to avail(rupees)
• EMI in advance OR EMI in arrears( for car loan only)
• Rate of interest(percentage)

However, you can calculate EMI for a home loan, car loan, personal loan, education loan or any other loan using this calculator.

### How to Calculate EMI Calculator Online

The EMI calculator formula uses three variables which are principal amount, rate of interest, and loan tenure to calculate the amount of EMI. So if you don’t how to calculate EMI then follow these steps.

• First, you have to search for an EMI calculator in the Google Search bar
• Then open the EMI calculator online
• Enter the value for P i.e. the value of the loan you wish to avail
• Enter the value of r i.e. the rate of interest offered by the lender
• Enter the value for n i.e. the duration of the loan in months
• After that submit the values.

The EMI value corresponding to the entered values will be generated by the EMI calculator immediately.

### How Can I Reduce my EMI?

As stated earlier, the EMI value is the amount that will be repaid every month over the entire loan tenure. There are several ways you can reduce your EMI value and they are listed below.

• Opt for a lower rate of interest
• Moving from fixed to floating rate of interest
• Lower the principal amount
• Balance transfer
• Increase the loan term
• Prepayment of loan

When one considers a home loan EMI calculator, then a high loan amount and long loan tenure become obvious. So, to keep the value of the EMI low, the home loan rate of interest must be amongst the lowest ones. However, the borrower has an option to either choose between the fixed and floating rate of interest.