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An EMI Calculator is a useful tool for calculating the monthly payment due to the lender (bank). To calculate EMI, it takes into account the loan amount, the interest rate, and the tenure of the loan.

How does an EMI Calculator work?

The mathematical formula for calculating EMI is:


  • P represents the loan amount or principal,
  • r is the monthly interest rate (annual interest rate divided by 12), and
  • n is the number of installments or loan tenure in months.

Benefits of using an EMI Calculator

  1. Saves Time: It provides quick results, saving you the hassle of manual calculations.
  2. Financial Planning: It helps you understand the breakup of the principal amount and the interest paid, aiding in better financial planning.
  3. Comparing Loan Options: You can compare various loan options available in the market.

Example of EMI Calculation

Let’s say you have taken a loan of $10,000 at an annual interest rate of 10% for a period of 1 year. 

  • First, convert the annual interest rate to a monthly interest rate: 10 / 100 / 12 = 0.00833.
  • Then, substitute the values into the EMI formula: EMI = 10000 * 0.00833 * (1 + 0.00833)^12 / ((1 + 0.00833)^12 - 1).
  • The EMI comes out to be approximately $879.16.