Full form of EMI is equated monthly installment. If you had taken or willing to take home loans, personal loans, business loans, educational loans, or any other loan through bank or credit card then it’s important for you to know properly about EMI calculations. EMI is a fixed payment that is required to pay at a fixed interval for a particular time. The loan has become a very important part of so many lives. Almost everyone take a loan at some point of time for many reasons for example funding their child’s education or consolidating debts etc.
If you take a loan from any bank then bank take their money back through EMI. Not only bank many popular ecommerce websites like Amazon, Flipkart, etc also give facility of EMI to their customer so that customers who can’t afford
expensive stuff can buy stuff with the help easy installments of EMI.
Highlight on EMI.
Whole amount of money which you have taken as a loan known as principal amount and the extra money you give is known as interest. A loan is basically a financial agreement between two parties, borrower and a lender. It’s not easy to repay the whole loan amount at a time, so to make it easier, the bank offers an option of EMI in which borrower can repay the loan by giving installments every month. When they choose the option of EMI, in addition to your principal, interest is also added.
Principal + Interest = EMI
Mathematical formula for calculating EMI
EMI= [P*R*(1+R)^N]/[(1+R)^ (N-1)]
EMI stands for equated monthly installment, P is the amount of loan borrowed or principal, Rit is the rate of interest on the loan, N is the number of the monthly installments you will pay or the tenure of repayment.
How EMI work?
Whatever the loan you have taken it is distributed according to the time period of that loan and the interest charged in the loan is also divided according to the time period and is added to the monthly installments. You can easily calculate EMI of home loan, personal loan and car loan through emicalculator.net.