Loan EMI Calculator
Calculate Equated Monthly Installments (EMI) for loans with detailed payment schedule.
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About Loan EMI
EMI stands for Equated Monthly Installment. It's the fixed amount that a borrower pays to the lender on a specified date each month until the loan is fully repaid. EMI consists of both principal and interest components.
Formula
EMI = P × r × (1 + r)^n / ((1 + r)^n - 1)
Where:
- P = Principal loan amount
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Total number of monthly payments (loan term in months)
Example
For a loan of $100,000 with an annual interest rate of 8% for 20 years:
- P = $100,000
- r = 8% ÷ 12 ÷ 100 = 0.00667
- n = 20 years × 12 = 240 months
EMI = $100,000 × 0.00667 × (1 + 0.00667)^240 / ((1 + 0.00667)^240 - 1) = $836.44
Understanding Amortization
Amortization is the process of paying off a debt over time through regular payments. An amortization schedule shows:
- How each payment is split between interest and principal
- The remaining loan balance after each payment
- How the interest portion decreases over time while the principal portion increases
Tips for Loan Management
- Making extra payments can significantly reduce the total interest paid and loan duration
- Refinancing may be beneficial if interest rates have decreased since you took the loan
- Compare different loan terms to find the right balance between monthly payment amount and total interest paid
- Consider the impact of loan fees and closing costs when evaluating loan options