Emi Calculator

Total Amount to Finance ($):

Annual Percentage Charge (%):

Repayment Period (Years):

Your Equated Monthly Installment (EMI):

Understanding Your Equated Monthly Installment (EMI)

An Equated Monthly Installment (EMI) is a fixed payment amount made by a borrower to a lender on a specified date each month. EMIs are commonly used to repay various types of financing, such as home financing, vehicle financing, or personal financing. The EMI amount helps individuals budget their finances effectively, as they know exactly how much they need to pay each month until the financing is fully repaid.

How EMI Works

Each EMI payment consists of two components: a principal amount and an interest amount. In the initial stages of the repayment period, a larger portion of the EMI goes towards paying off the interest. As the repayment period progresses, a larger portion of the EMI goes towards reducing the principal amount. This structure ensures that the total amount financed, along with the accumulated annual percentage charge, is fully repaid over the agreed-upon repayment period.

Components of Our EMI Calculator

Our EMI Calculator simplifies the process of determining your monthly payment by taking into account three key factors:

Total Amount to Finance ($): This is the total sum of money you are borrowing from the lender. It represents the principal amount on which the annual percentage charge will be calculated.
Annual Percentage Charge (%): This is the annual rate at which the lender charges for the money you borrow. It's expressed as a percentage and is a crucial factor in determining the total cost of your financing. The calculator converts this annual rate into a monthly rate for calculation purposes.
Repayment Period (Years): This is the total duration, in years, over which you intend to repay the financed amount. A longer repayment period typically results in lower monthly EMIs but may lead to a higher total annual percentage charge paid over the life of the financing. Conversely, a shorter period means higher EMIs but less total annual percentage charge.

Calculating Your EMI

The formula used to calculate EMI is:

EMI = P × R × (1 + R)^N / ((1 + R)^N – 1)

Where:

P = Total Amount to Finance
R = Monthly Percentage Charge (Annual Percentage Charge / 12 / 100)
N = Total Number of Monthly Installments (Repayment Period in Years × 12)

Example Calculation

Let's consider an example to illustrate how the EMI is calculated using our tool:

Total Amount to Finance: $200,000
Annual Percentage Charge: 7%
Repayment Period: 15 Years

First, we convert the annual percentage charge to a monthly rate and the repayment period to months:

Monthly Percentage Charge (R) = (7 / 100) / 12 = 0.00583333
Total Number of Monthly Installments (N) = 15 years * 12 months/year = 180 months

Now, applying the EMI formula:

EMI = 200,000 × 0.00583333 × (1 + 0.00583333)^180 / ((1 + 0.00583333)^180 – 1)

EMI = 200,000 × 0.00583333 × 2.83285 / (2.83285 – 1)

EMI = 1166.66 × 2.83285 / 1.83285

EMI = 3305.00 / 1.83285

EMI ≈ $1,803.10

Thus, for a $200,000 amount financed at an annual percentage charge of 7% over 15 years, your Equated Monthly Installment would be approximately $1,803.10.

EMI Calculator