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An Equated Monthly instalment (EMI) is a loan repayment plan that allows borrowers to repay a loan in fixed monthly instalments. Banks and other lending institutions typically offer EMIs that are 10% of your monthly income. You can use them for various purposes, including home renovation, cars, education, health or anything you need.

A personal loan EMI usually involves interest rates. The total loan cost, including principal and interest, is divided equally over the months in the repayment period. It allows borrowers to budget their monthly expenses more efficiently and helps them avoid surprises when it comes time to repay their loans.

To qualify for an EMI plan, borrowers generally need a good credit history and meet certain income requirements. EMIs can be a helpful tool for those who want to break up their large loan payments into smaller, more manageable chunks.

How to Calculate EMI for Personal Loan?

When you take out a Personal Loan or any loan, you must make monthly payments to pay off the debt. The amount of each payment is known as the EMI. Before you use an personal loan EMI calculator to calculate the EMI for your loan, you will need to know the following information:

  • Loan amount
  • Interest rate
  • Number of years you will pay off the loan

The first step is to calculate the principal amount, i.e., the amount of money that you are borrowing. Next, you need to calculate the interest rate. It is the percentage of the principal amount that you will be paying in interest each year. Then, you need to calculate the number of years that the loan will last. Finally, you need to calculate the monthly payment amount by dividing the annual payment by 12.

Once you have this information, you can use a simple equation or an online loan calculator to calculate the EMI.

The Calculation Formula for EMI

The calculation is (P x r x (1+r) ^n)/ ((1+r) ^n-1)), where P is the principal amount of the loan, r is the periodic interest rate, and n represents the number of monthly instalments.

This equation simplifies to P x (1+r)^n/((1+r)^n-1), which shows that the instalment payments are equal to the principal amount times one plus the interest rate raised to the power of n divided by (one plus the interest rate raised to power of n minus one).

What are the factors that can affect your Personal Loan EMI?

A Personal Loan EMI can vary based on some factors. Some factors that can affect your EMI have been explained below.

  • Interest rate

The higher the interest rate, the higher your monthly payment will be. It is because more of your monthly payment will go towards repaying the interest on the loan instead of reducing the principal amount.

  • Loan amount

The more the principal amount, the higher your EMI will be. It is because you’ll pay back more money over an extended period. In simpler words, the longer you take to repay your EMI, the more you will be paying.

  • Tenure

The longer you keep your loan, the lower your EMI, as you will pay back a smaller percentage each month. Nevertheless, the longer the loan term, the more interest you will have to pay. Typically, loan tenures range from 12 to 84 months.


You can easily calculate your Personal Loan EMI by following the steps provided. We hope this information can help you make an informed decision about whether or not taking out before  applying for a personal loan is the best option for you.