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What are EMI Calculators and Why You Must Use Them

This post is contributed by Shiv Nanda.

If you cannot pay the full price of an expensive product or an asset like a car or house, you can take a personal loan and pay the amount in EMIs. Equated Monthly Instalment or an EMI is the amount that you have to pay back to the lender every month on the account of loan provided by them. The EMI amount is deducted each month from the loan amount to get to the balance payments.

What is an EMI Calculator?

An EMI calculator is an efficient financial tool that helps you calculate the EMIs that you need to pay each month until the loan is fully repaid.

You just need to enter the loan amount you borrowed, personal loan interest rates and the tenure you have in mind. 

The EMI calculator uses the following formula:

EMI = [P x R x (1+R) ^N]/[(1+R) ^N-1],
Where,
P is the principal loan amount,
R is the interest rate per month,
N is the number of monthly instalments

Benefits of Using EMI Calculators

1. They are Simple and Accurate

If you try to do the calculations manually, it will take you hours to do so. And there may be a risk of human error. The EMI calculator can do complex calculations in a matter of seconds. 

All the calculations will be accurate since there is no human intervention. The personal loan EMI calculator helps you determine the EMIs amounts accurately without the tedious calculations and stress. 

2. Helps you Plan the Monthly Budget 

Since you can accurately calculate the repayment amount, you will be in a better position to understand how it will affect your monthly expenses. You can modify the expenses once you start paying the EMIs in a way that doesn’t strain your budget.

3. Allows You to Compare Interest Rates of Various Lenders 

An EMI calculator lets you compare interest rates of different lenders and corresponding EMI amount for each interest rate. This way you can choose an EMI amount for the best interest rate

4. Helps is Assessing Your Loan Amount Eligibility

An EMI calculator helps you assess your loan amount eligibility. It lets you understand how much of your required loan amount can be financed. 

Some sophisticated EMI calculators consider the local and state taxes, running loan EMI and insurance as well. 

The calculator shows an amortization table, which is essentially the progressive payoff of the loan. You can see the break-up of each payment that will get attributed to the principal and interest. 

5. Helps You Understand Exactly How Much You Can Afford

The calculator allows you to enter different EMI amounts or tenure durations after you apply for a loan. This helps in determining how long you will take to pay off the loan for different EMI amounts. You can also learn exactly how much you have to pay if you wish to keep a shorter tenure. 


If you are planning to buy something with an EMI plan, do use the EMI calculator. It will help you save money and plan your finances better.

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