This **EMI calculator** estimates your Equated Monthly Installment loan payment, total paid, total interest paid and the payoff date together with an amortization schedule. There is more info on this topic below the form.

## How does this EMI calculator work?

This financial tool considers the following variables that should be provided on a EMI calculation:

- Loan amount which is the total borrowed.
- Loan tenure (term) which is the period of time to pay off the debt. The loan tenure can be expressed either in months or years depending on how it is detailed in your credit institution’s offer.
- Interest rate which is the assumed fixed annual interest rate.
- Start date which is not a mandatory information but it may be used to figure out the moment you will be debt free.

The algorithm behind this *EMI calculator* applies the formula explained below:

Where:

EMI = Equated Monthly Installment value.

P = loan amount taken.

r = yearly interest rate

n = loan tenure (term) in months.

## What is EMI?

In finance, EMI is the abbreviation for Equated Monthly Installment which represents a fixed payment made by a borrower to his creditor/lender at a certain date each month as agreed between the two parties. Equated monthly installments cover the principal and the interest the borrower owes to the lender each month for the repayment of the loan until the debt is paid entirely.

Borrowers prefer this financial product because its main advantage is that they know exactly how much money they will need to pay on a monthly basis during the loan tenure, so that at the end of the repayment period the debt is paid in full. On the other hand, one of its main disadvantaged of EMI loan is that in most cases owners have higher costs with interest than in case of standard loans. This is because lenders practice higher interest quotes in order to protect against any increase of the interest rates over time.

## Example of a calculation

An individual wants to know which will be the monthly payment of a loan of $50,000 taken over 5 years (60 months) at an interest rate of 5%, while the starting date is considered April 2015?

■ EMI Monthly payment: $943.56

■ Total number of monthly payments: 60

■ Total interest payable: $6,613.70

■ Total paid (principal+interest): $56,613.70

■ Estimated pay-off date: Mar, 2020

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