How to calculate EMI for a loan?

Answer

A:

EMI (Equated Monthly Installment) is the fixed monthly amount you pay to the lender to repay your loan over a specified tenure. It includes both principal and interest.

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EMI Formula:

$$EMI = frac{P imes r imes (1+r)^n}{(1+r)^n - 1}$$

Where:

• P = Principal loan amount

• r = Monthly interest rate (annual rate ÷ 12 ÷ 100)

• n = Loan tenure in months

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Step-by-Step Calculation:

1. Convert annual interest rate to monthly rate:
   For example, if the annual interest rate is 12%, monthly rate $r = frac{12}{12 imes 100} = 0.01$ (i.e., 1%).

2. Calculate the total number of monthly installments:
   For a 5-year loan, $n = 5 imes 12 = 60$ months.

3. Plug values into the formula:
   Suppose you borrow ₹5,00,000 at 12% per annum for 5 years:

   $$EMI = frac{500000 imes 0.01 imes (1+0.01)^{60}}{(1+0.01)^{60} - 1}$$

4. Calculate the numerator and denominator:
   Numerator = $500000 imes 0.01 imes (1.01)^{60}$
   Denominator = $(1.01)^{60} - 1$

5. Solve to get EMI amount

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Quick Example:

• Loan Amount: ₹5,00,000

• Annual Interest Rate: 12%

• Tenure: 5 years (60 months)

• Monthly Interest Rate: 1% (12%/12)

Calculating EMI gives approximately ₹11,122 per month.

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Use EMI Calculators for Easy Calculation

You can also use online EMI calculators where you just enter the loan amount, interest rate, and tenure, and it instantly shows your EMI.

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Why Calculate EMI?

• Helps plan your monthly budget

• Compares different loan offers

• Understand total interest payable over the tenure

• Learn more and get the expert support you deserve:
  Visit: www.legals365.com
  Call: +91 9625961599
  
  Questions? Advocate B.K. Singh and the team are here to support you!

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If you want, I can help you with a ready-made EMI calculator code or tool recommendation!

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