New Delhi:
Planning to take a housing loan, a car loan or a personal loan in any time near. While each bank provides a simple EMI calculator on its website these days, here is a simple way on how to calculate your EMI. All you need to know by default is how to use MS excel.
USING EXCEL
In Excel, the function for calculating the EMI is PMT and not EMI. You need three variables.
In Excel, the function for calculating the EMI is PMT and not EMI. You need three variables: These are rate of interest (rate), number of periods (NPER), and lastly the value of the loan or present value (pv).
The formula which you can use in excel is: PMT(rate,nper,pv).
It must be noted that the rate used in the formula should be the monthly rate, The number of periods represents the number of EMIs.
The result will come in negative or red, which indicates the cash outflow of the borrower.
Using Mathematical Formula
Some people are confused in mentioned formula. If you don’t wish to use excel, you can use your mathematical mind or an electronic calculator to know how much the EMI comes to.
The mathematical formula for calculating EMIs is:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where P stands for the loan amount or principal, R is the interest rate per month [if the interest rate per annum is 10%, then the rate of interest will be 10/(12 x 100)], and N is the number of monthly instalments. When you use the above formula, you will get the same result that you will get in the Excel spreadsheet.
