EMI Calculator

Planning to Take a Loan? Start with an EMI Calculator

Before you apply for a loan, it’s important to understand how much you’ll need to repay every month. An EMI Calculator helps you do just that — giving you a clear estimate of your monthly instalments, so you can plan your finances smartly and borrow with confidence.

What Is an EMI Calculator?

An EMI Calculator is an easy-to-use online tool that helps you calculate your Equated Monthly Instalment (EMI) in seconds. By entering the loan amount, interest rate, and loan tenure, you get a clear picture of your repayment plan. Whether it’s a home loan, personal loan, car loan, or education loan, the EMI calculator eliminates the need for complex manual calculations and helps you make better financial decisions.

How Can an EMI Calculator Help You?

The ClearTax EMI Calculator makes loan planning easier by instantly calculating your monthly instalment. Here’s how it helps:

• Gives a detailed breakdown of principal and interest components
• Saves time and reduces chances of manual errors
• Helps you compare different loan options effectively
• Supports better budgeting and repayment planning

This tool is especially useful when you’re comparing different lenders or deciding on the best tenure and loan amount to suit your income.

EMI Calculation Formula

The formula used in most EMI calculators (including ClearTax) is based on the reducing balance method:

EMI = [P × r × (1 + r)ⁿ] / [(1 + r)ⁿ – 1]

Where:

• EMI = Equated Monthly Instalment
• P = Principal loan amount
• r = Monthly interest rate (Annual Rate ÷ 12 ÷ 100)
• n = Loan tenure in months

EMI Calculator Example

Let’s understand how the EMI Calculator works with an example:

• Borrower: Mr. A
• Loan Amount (P): ₹5,00,000
• Interest Rate (Annual): 10%
• Loan Tenure: 5 years

Step 1: Convert the annual interest rate into monthly
10% ÷ 12 = 0.008333 (monthly rate)

Step 2: Calculate tenure in months
5 years = 60 months

Now, using the EMI formula:

EMI = [500000 × 0.008333 × (1 + 0.008333)^60] / [(1 + 0.008333)^60 – 1]

After solving the above equation,
EMI ≈ ₹10,624 per month

So, Mr. A would pay ₹10,624 every month for 5 years to repay the ₹5,00,000 loan at 10% annual interest.

Why Use the EMI Calculator?

• Quickly know your monthly outflow
• Plan your loan budget in advance
• Avoid overborrowing by knowing affordability
• 🔹Make better choices between loan tenures and interest rates