# Want to Calculate EMIs on Your Loan but Don’t Know how to do it?

June 17, 2019

Life of middle-class people has become so tough. The salary is fixed and expenses are growing every month. For sometime you can suppress your essentials but you can never say no to your adorable son for his wish. And what else we can do, as the fight for status is never ending in Indian Society. If Sharma Ji has bought a car, then you will also have to buy a new car. If Verma Ji’s son has an expensive firefox bicycle, then your daughter will be demanding the same. This worthless drama of showoff goes on and on.

To fulfil the necessities of our family we take loans from leading Banks and NBFCs such as SBI, HDFC, ICICI, Axis, Kotak Mahindra, Bajaj Finserv etc. Home Loan for making a new house, Education Loan for children’s higher study, Personal Loan for vacation and numerous  EMIs on credit card for latest refrigerator, air conditioner, laptop, PlayStation, furniture etc.

Now the big question that arises here is ‘How we can make sure that the EMIs, we are paying every month is correctly charged’? How to cross-check if we are not being fooled and paying unwanted hidden charges? Seems difficult but actually, it’s not!

How to Calculate the EMI on Your Loans

Calculation of Equated Monthly Installment (EMI) is quite simple. It can be done using two ways; first by using Microsoft Excel Sheet and second manually by using a mathematical formula. As MS-Excel is not accessible everywhere and also everyone doesn’t know how to use excel, we will use both ways to calculate the EMI.

EMI Calculator –  Excel Sheet

In the Excel spreadsheet, the function of PMT (rate, nper, pv) comes into the use. The PMT function syntax has arguments written below:-

pv = principal amount / present value of loan

nper = number of periods, total no. of payments for the loan

rate = fixed rate of interest for the loan

Let’s understand the above formula with an example.

Suppose Mr Sinha takes a loan of Rs.10 lakh from HDFC Bank for renovating his house. He wants to know about his EMI amount; he needs to pay in 120 instalments in 10 years. The interest rate of the loan is fixed at 14% per annum. Be aware that the interest rate we are using in this formula is monthly rate i.e. 14%/12 = 1.16%

The equated monthly instalment for the given figures is = PMT(14%/12, 10*12, 10,00,000) = 15526

Note one thing that excel spreadsheet doesn’t include the processing fee. So, add it yourself to see the exact figure.

EMI Calculator – Mathematical Formula

This method of calculating EMI is somewhat difficult. But yes we need to know about our hard earned money, so we will do it.

Mathematical Formula – [P x R x (1+R)^N]/[(1+R)^N-1]

P = Principal loan amount

R = Rate of Interest per annum

N = Total number of monthly instalments

To check if both excel formulas and mathematical method yield the same result, again take Mr Sinha’s example here. Principal amount is Rs. 10,00,000, Interest Rate is 14/12×100 and the total number of instalments is 120.

The EMI calculated by the mathematical formula is = [10,00,000 x 14/12×100 x (1+14/12×100)^120]/[(1+14/12×100)^120-1] = 15526

Please use a scientific calculator to make the calculations easy.

Some users find these manual methods of calculation troublesome and remain confused after taking the loan. For them, I suggest Online EMI Calculator. OEC can be used very easily without doing any complex calculation in minimal time.

Types of EMI Calculator

EMI Calculators are of various types. The type of calculator you want to use depends upon the individual loan you want to take.

Home Loan EMI Calculator – Home Loan is one of the most opted loans in the country. As every Indian want to have his own house.

Before opting home loan, one must calculate all his expenses as it has longer tenure and the high principal amount comparatively.

Home loan EMI calculator is an essential tool for all home buyers. It empowers them to expect transparency in the remaining EMI instalments and Interest Rate charged over months. The best part of this calculator is that it also offers the feature to add planned pre-payments.

Government Banks namely SBI, PNB provides affordable home loan at a legitimate interest rate. You can visit their website for loan application.

Personal Loan EMI Calculator – Personal Loan is a significant financial instrument for middle-class people. They use it for various purposes like for daughter’s wedding, going on a foreign trip, renovating an old house, pay off huge credit card bill, bear hospital bills etc. Before filling the application for a personal loan, you should use the Personal Loan EMI Calculator to get precise figures of monthly EMIs and count if you can repay the EMIs regularly without any trouble.

Personal Loan Calculator may ask you some additional details viz. Your monthly salary, current company, city, work experience, any ongoing EMIs etc. Getting Personal Loan is so simple these days, NBFCs like Bajaj Finserv and Banks like HDFC & ICICI disburse personal loan directly to your bank account without any delay.

Car Loan EMI Calculator – Car is a dream asset of every youngster in the nation. Buying a Car is still counted as a luxury in India. Every individual has their own choice somebody likes Maruti Dzire, well some feel comfortable in Mercedes Benz. Depends upon the size of the pocket and personal preference.

But if you want to make sure that the comfort of the Car doesn’t become the discomfort of your bank balance, then you should use a Car Loan EMI Calculator.  You have to put the interest rate, the amount you want to borrow, repayment tenure, processing fee and in return you get the EMI instalments, which you have to pay every single month on a specific date.

Make a mark that you don’t consider down payment while calculating the EMIs of Car loan because that is something you have to pay at the time of purchase. If you want to compare the car loans offered by distinct Banks, then you can visit BankBazaar.com. They tell you about your eligibility, features & benefits, documents checklist, the application process, faster approval steps and what not. In addition to this, they have some really good offers running on their website. Finally, after reading all terms and conditions and calculating the EMIs, you can apply for the car loan from a bank having lowest interest rate and no hidden policies.

At this time of inflation and unstable job culture, one needs to be really careful related to his or her financial health. One wrong decision can ruin your stable life and cause cash crunch for you. Every time, you plan to take a loan, be double sure if you will be able to repay all the EMI instalments on time. Always go with the reputed and trusted Banks-NBFCs such as Kotak Mahindra, Axis, HDFC, Tata Capital, ICICI, Bajaj Finserv. Read all the terms and conditions properly. Make a call to the Bank representative or visit the branch to have all the details related to the loan. Ask them about any hidden charges or fine charged on loan. And yes, don’t start applying here and there everywhere for the loan. As it will impact your Credit Score negatively.

Being alert at this time of price hike can save your bucks and give you monetary freedom.