With rising living costs and changing lifestyle needs, borrowing through loans or credit cards has become common for many individuals. While access to credit has become easier, managing repayments responsibly is just as important. This is where understanding EMIs becomes essential for effective financial planning.
An EMI allows borrowers to repay a loan in fixed monthly installments, making large expenses more manageable. Using an EMI calculator before taking a loan helps you plan repayments without putting pressure on your monthly budget.
EMI stands for Equated Monthly Installment. It is the fixed amount a borrower pays every month to repay a loan or credit over a specified tenure.
When you take a loan, you enter into an agreement with the lender that outlines the loan amount, interest rate, tenure, and repayment terms. The repayment happens through EMIs, which include both the principal amount and the interest component.
In simple terms, EMI is the total monthly payment made towards repaying a loan.
An EMI calculator is a financial tool that helps you calculate your monthly loan installments in advance.
By entering basic loan details such as:
you can instantly know your EMI amount. Paytm Money's EMI Calculator allows you to estimate your monthly repayment even before applying for a loan, helping you make informed borrowing decisions.
Your EMI depends on a few key factors:
Loan Amount: The amount you borrow directly impacts your EMI. A higher loan amount results in a higher EMI.
Interest Rate: The interest charged by the lender affects the total repayment amount. Lower interest rates generally reduce EMI burden.
Loan Tenure: The repayment period plays an important role. A longer tenure reduces EMI but increases overall interest paid.
Using the Paytm Money EMI Calculator is simple:
The calculator instantly displays your monthly EMI, helping you plan your finances efficiently before borrowing.
Loan EMI is calculated using three main factors:
Since these values vary across lenders and loan types, EMI differs for every loan. Understanding this helps you compare options before making a decision.
EMI = [P × R × (1+R)ⁿ] / [(1+R)ⁿ − 1]
Where:
EMI = Equated Monthly Installment
P = Principal loan amount
R = Monthly interest rate
n = Loan tenure in months
Suppose you take a personal loan of ₹10 lakh for 2 years at an interest rate of 20% per annum.
Convert values to monthly units:
Loan tenure = 24 months
Monthly interest rate = 20 ÷ 12 = 1.66%
Using the EMI formula, the monthly EMI comes to approximately ₹50,896.
An EMI calculator performs these calculations instantly, eliminating the need for manual conversions or complex formulas.
Using the Paytm Money EMI Calculator offers several benefits:
Different loans have different repayment structures. Paytm Money offers dedicated calculators for various loan types.
Personal loans are unsecured loans used for multiple needs such as medical expenses, travel, weddings, or emergencies. Since they carry higher interest rates and shorter tenures, calculating EMI beforehand is essential to avoid financial strain.
Home loans involve large loan amounts and long repayment tenures. Before purchasing a property, calculating EMI helps you understand affordability, down payment requirements, and long-term repayment obligations.
Car loans usually have shorter tenures compared to home loans. Since missed repayments can lead to penalties or repossession, it is important to calculate EMIs in advance and ensure they fit within your monthly budget.
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