How to calculate EMI Manually?

How to calculate EMI Manually?

When taking out a loan, it’s important to understand the cost and terms of repayment. One key aspect of loan repayment is the Equated Monthly Installment (EMI), which is the fixed amount you pay each month to repay the loan. While you can use an online EMI calculator, it’s also useful to know how to calculate EMI manually. In this post, we’ll guide you through the steps of calculating EMI manually.

Step 1: Understand the variables involved

Before we begin, it’s important to understand the variables involved in EMI calculation. The EMI depends on three key factors: the loan amount (P), the interest rate (R), and the loan tenure (N). The loan amount is the total amount you borrow, the interest rate is the percentage of interest charged on the loan amount, and the loan tenure is the duration of the loan.

Step 2: Calculate the monthly interest rate

To calculate the EMI, we first need to calculate the monthly interest rate (r). This can be done by dividing the annual interest rate (R) by 12 (the number of months in a year). For example, if the annual interest rate is 12%, the monthly interest rate would be 1% (12/12).

Step 3: Calculate the number of payments

The loan tenure (N) is the number of monthly payments you will make to repay the loan. For example, if you take a loan for 5 years, the loan tenure would be 60 months (5 years x 12 months).

Step 4: Calculate the EMI

Now that we have all the variables, we can calculate the EMI using the following formula: EMI = [P x r x (1+r)^N] / [(1+r)^N-1]

Let’s break down this formula. The numerator is the product of the loan amount (P), the monthly interest rate (r), and [(1+r)^N]. The denominator is [(1+r)^N-1].

Here’s an example: Let’s say you borrow a loan of Rs. 1,00,000 at an interest rate of 12% per annum for a tenure of 5 years (60 months). The monthly interest rate (r) would be 1% (12/12), and the number of payments (N) would be 60. Plugging these values into the formula, we get: EMI = [1,00,000 x 0.01 x (1+0.01)^60] / [(1+0.01)^60-1] EMI = Rs. 2,211

Therefore, the EMI for this loan would be Rs. 2,211 per month.

Step 5: Check your calculation

It’s always a good idea to double-check your EMI calculation. You can do this by using an online EMI calculator or by cross-checking your calculation with your lender.


Calculating EMI manually is a straightforward process that can help you understand the cost and terms of loan repayment. However, it’s important to note that there may be some variations in the EMI calculation due to rounding or other factors. Additionally, the actual EMI may also include other charges such as processing fees or prepayment charges, so it’s important to carefully review the loan agreement before taking out a loan.

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