# Do You Know How Personal Loan EMI is Calculated? Are you confused about how EMI on a personal loan is calculated by your lender? Do you want to check whether they are doing it in fair terms or not? This dilemma is faced by almost all who are planning to take instant personal loans or any other loan. EMI stands for Equated Monthly Instalments under personal loans, in laymen language it the monthly amount that is payable by the borrower till the loan tenure is completed.

Before understanding how personal loan EMI is calculated, it is essential to understand a few important terms that are used in EMI calculation.

Important Factors or Variables used in EMI Calculation

• Loan Amount – It is the amount that is taken by the borrower.
• Rate of Interest – This is the percentage of the loan that a bank or lending institution charges the borrower. It is defined as an annual percentage of the outstanding loan amount.
• Tenure of the Loan – It is the duration or term for which the borrower has taken the loan. It is defined in the number of years or months.

Personal Loan EMI Calculation Methods

1. Manual Calculation of Personal Loan EMI

If you want to calculate the personal loan EMI manually, then you can use the following formula

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

Where “P” stands for Principal value, i.e. the actual loan amount, “N” is the loan term period or tenure, and “R” is the Interest rate per month.

• Calculate Personal Loan EMI on Excel

A function PMT is used in Excel to calculate the instant personal loans EMI. This particular Excel function uses the same factors or variables that are used in the manual calculation but with different notations. They are Rated i.e. monthly rate of interest, PV i.e. outstanding principal or present value of the loan amount, and NPER i.e. the number of periods or tenure and formula is

PMT (Rate, NPER, PV)

To understand this, let’s take one example. Sanjay takes the 5 lakh instant personal loan at an interest rate of 13% per annum for 5 years. So in this case

• PV is 5 lakh
• The rate is 13% per annum and 13%/12 (months) = 0.01
• NPER is 5 years and 5*12 (months) = 60 months

So, the formula in Excel would be = PMT (0.01, 60, 500000) = INR 11,122.22

The resulting output will come in negative and red that suggest the borrower’s total outflow.

• Online Personal Loan EMI Calculator

Although you can calculate the personal loan EMI manually and using Excel to understand the factors or variables that affect the same. But there is a simple way around, online personal loan EMI calculator that is provided by almost all banks or lenders who are offering personal loans

An online EMI calculator helps you to calculate the exact amount that you’ll be paying every month as an EMI to repay the entire loan amount for the specified loan tenure or pre-decided term duration. This allows you to input multiple options and analyze all of them to check the most favourable or best comfortable option to choose from.

YeLo also offers an online EMI calculator along with multiple lenders under one roof or at one single place. This helps you to compare the available online loan options and apply for the one that suits your requirements. At YeLo, you can avail the instant personal loan in just 3-steps, i.e. enter the details, compare, and select. No matter whether you need an instant personal loan of 20 thousand or 5 lakh, you can apply at YeloNow. Thus, YeLo is a great platform for quick, fast, and hassle-free instant personal loans.

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