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Calculating the EMI on Your Personal Loan

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Created on
January 10, 2023


What’s Inside

Personal loans come in handy when you need quick financial support, but you must also be mindful of the amount of debt you're taking on lest you find yourself struggling to repay it. One way to ensure you don’t get into such a position is to calculate the EMIs on your personal loan.

EMI stands for Equated Monthly Instalment. It is the fixed monthly amount you need to pay the lender until the end of the loan term and includes a combination of the principal amount borrowed and the interest levied. 

Knowing this amount will help you plan and manage your monthly expenses so you don’t miss a payment. It can also help you achieve the optimum balance between the loan amount, interest rate and loan tenure. 

Let us see how to calculate the EMI for a personal loan with the help of an example.

Formula to calculate EMIs 

Formula: [P x R x (1+R) ^ N] / [(1+R) ^ (N-1)]

In the formula mentioned above, the variables include:

P – the original amount borrowed, known as the Principal amount

R – the rate of interest levied by the lender, declared on a per annum basis but value calculated in monthly terms

N – the duration for which the loan has been taken, also known as the tenure of the loan (in months)

Now, let us assume that you have borrowed a sum of ₹5 lakh for a period of two years (24 months) at a rate of 12% per annum. Let’s plug these numbers into our formula:

P = 5,00,000

R = Rate of interest (per annum) / 12 /  100 = .01

N = 12

The equation becomes:

[500000 x 0.01 x (1+0.01) ^ 24] / [(1+0.01) ^ (24-1)]

This results in an EMI of ₹23,537. 

Easy? Calculating this manually can be tedious. Fortunately, you can use the Fi Money personal loan EMI calculator instead. Here’s how.

Calculating personal loan EMIs the easy way

The three main factors that affect your EMIs are:

  • Principal amount – the amount you are borrowing 
  • Rate of interest – the rate fixed by the lender to lend you money
  • Duration of the loan – the number of years you will have to repay the loan

An online personal loan calculator takes these critical factors into account and provides your EMI amount instantly. The underlying formula remains the same, all you need to do is provide the inputs for the three variables, and the calculation is done automatically. 

Here are the steps to be followed:

Step 1: Go to Fi Money’s online personal loan EMI calculator 

Step 2: Enter the loan amount to be borrowed

Step 3: Enter the annual interest rate 

Step 4: Enter the loan tenure in years

Your monthly EMI amount will appear instantly, along with the total interest you will incur and the net total amount you will need to pay.

Benefits of using an EMI calculator

The obvious benefit of using an online personal loan EMI calculator is that you avoid having to do tedious and cumbersome manual calculations that can also be prone to errors. 

The tool is free, easy to use and can be used unlimited times to try out various permutations and combinations of the loan variables to identify the right mix for you. 

Knowing your EMI beforehand helps you plan and manage your finances to ensure you can repay the loan comfortably. Timely repayment leads to a healthy credit score, something that is essential when taking out a loan in the future and for other credit products.

A personal loan must be repaid on time to maintain a good credit score. Knowing the exact amount you need to pay back every month ensures you are prepared to do so promptly. It also helps you back-calculate and plan your monthly budget and other expenses wisely. 

It is advisable to only borrow amounts that are within your financial capacity to repay. Fi Money offers hassle-free and paperless instant personal loans at competitive rates, along with all the tools you need to plan your repayment and finances sustainably. 

Frequently Asked Questions

1. How are personal loan EMIs calculated?

A personal loan EMI depends on three critical factors:

  • The amount to be borrowed, known as the Principal (P)
  • The rate of interest applicable on the loan (R)
  • The duration for which the loan is taken (N)

The formula used to calculate the personal loan EMI is [P x R x (1+R) ^ N] / [(1+R) ^ (N-1)]

You can use our online personal loan EMI calculator to determine the EMI automatically by simply providing the values for each of the above-mentioned variables.

2. What is the personal loan EMI calculation formula?

The formula used to calculate the personal loan EMI is [P x R x (1+R) ^ N] / [(1+R) ^ (N-1)]


P stands for the principal amount borrowed

R stands for the personal loan interest rate fixed by the bank or NBFC

N stands for the tenure of the loan (in months)

An online personal loan EMI calculator can do this for you in a jiffy without the need for tedious calculations.

3. How do you calculate monthly payments on a personal loan?

The monthly payment on a personal loan is known as an EMI. This is a fixed amount that must be paid to the lender for the loan period. The monthly EMI is calculated using the formula: 

[P x R x (1+R) ^ N] / [(1+R) ^ (N-1)]

The three variables, P, R, and N, are defined as -

P = Principal Amount – total money borrowed

R = Rate of Interest – the annual interest rate levied by the lender

N = Loan tenure – the duration (in months) for which the loan has been availed

You can calculate the EMI manually or make use of an online personal loan EMI calculator to do this automatically for you.

4. What does EMI mean in loans?

EMI stands for Equated Monthly Installment. It is a fixed amount that borrowers pay each month to repay their loans, which includes both the principal amount and the interest. EMIs ensure that borrowers can repay their loans over a specific period in regular and manageable installments.

5. Is taking an EMI good or bad?

Taking EMI can be both good and bad, depending on the situation. It is good when you need to make a significant purchase or investment but don't have the full amount upfront, as EMI allows you to spread the cost over time. However, it can be bad if you don't manage your finances well and end up with too many EMIs, leading to financial stress and debt burden. It's essential to assess your ability to repay before opting for EMI to ensure it aligns with your financial capabilities.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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