Personal Loan

Here’s How You Can Calculate Personal Loan EMI in Excel


More and more individuals are turning to personal loans as a primary source of credit. People get these types of loans to cover unexpected expenses. They can be either short-term or medium-term.

Personal loans are available without requiring collateral, but this will depend on your creditworthiness, earnings, age, and other variables. Personal loans offer attractive interest rates to borrowers. Plus, you can complete the paperwork procedure online for speedy loan disbursement.

Yet, the first step in getting a personal loan is figuring out the EMI amount. That’s because this will impact your ability to make monthly payments. In this article, we’ll show you how to calculate personal loan EMI in Excel.

So, without further ado, let’s jump right into it!

How to Calculate Loan EMI Using Excel

Once you are familiar with the formula, determining your EMI payments in Excel is quite simple. In addition, you can use free tools like EMI calculators present on the websites of most lending banks. In these, you can enter essential details like the loan balance, the rate of interest, and the time to repay the loan and immediately get the EMI amount you need to pay.

Calculating your personal loan EMI using Microsoft Excel is very simple. For this, Excel offers a handy formula: PMT (rate, nper, pv, [fv], [type]).

  • PMT is short for “payment,” and the value it generates is the monthly instalment payment on a loan. This function requires the following parameters:
  • rate – The loan’s annual percentage rate of interest
  • nper – The number of loan payments
  • pv = current loan balance or outstanding loan amount
  • fv – The money you hope to have on hand once you complete the final payment or its future worth. Its default value is the loan amount that remains unpaid after you’ve repaid all the loans.

For this function to work, rate and nper must be of the same units. For example, to calculate monthly EMI, use the monthly interest rate rather than the yearly one. Take a look to see what we mean:

Think about you’re taking out a loan of 20 lakh rupees at an interest rate of 12 percent per year for 25 years. If paid back in three equal quarterly payments:

Rate = 12%/4 per quarter

Npr = 25X4

EMI calculation in excel will be: = PMT(12%/4, 25*4, 20,00,000)

How to Calculate Personal Loan EMI Using Mathematical Formula?

No worries if you don’t have Microsoft Excel. You can still determine the EMI using a calculator or basic arithmetic skills. The formula often used to determine the EMI amount is:

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


In this equation,

  • P is the debt principle
  • R is the rate of interest each year
  • N represents the number of payments during the life of the loan.

For the EMI formula to work as expected, the rate units and EMI period must be identical, as they are in the PMT formula. So, suppose the interest rate payable is 10% per year, and you need to figure out your EMI. In that case, you would put [10/(12X100)] into the calculation for R.

The PMT function derives its output from the same underlying computation as the EMI. Hence, the two are interchangeable.

Remember that these figures assume a fixed interest rate throughout the loan’s term. Also, the results don’t account for any costs other than the principal amount and interest.

How to Calculate Personal Loan EMI Using Online Calculators?

Most financial institutions and banking organizations calculate personal loan EMI using a formula. You can also use an EMI calculator to estimate your EMI. Your EMI will depend on the total amount you borrow, length of time, and interest rate.

3 Facts You Should Know About Personal Loan EMI Calculation

1. Your EMI payment factors in interest accrued on that principal.

You’re doing two things when you pay your EMI: repaying the principal and the interest. You repay the loan over the loan’s term by making equal monthly payments, or EMIs. Suppose you first begin making EMI repayments. Then, the amount you send toward interest is more than the amount you give toward the principal. In contrast, your EMIs will go more toward repaying the loan’s principle than interest.

2. Make sure the monthly EMI payment doesn’t exceed 40% of your take-home pay.

Suppose you’re considering taking out a loan. Whether a car loan or a home loan, your monthly EMI payments shouldn’t exceed 40% of your gross monthly income. That’s because most individuals only have a certain amount of money to pay bills. Whether you’re an entrepreneur or an employee, your money is always subject to market risk. Thus, it is advisable to play it safe and ensure that your EMI expenses are at most 40% of your earnings.

3. Your interest rate will fluctuate based on several variables.

The interest rate charged on your personal loan is a major component in determining your EMI. Income, credit score, loan amount, and age, all play a role in determining the interest rate. But, variables like your credit history influence the sum. Loan and credit card payments, both old and new, impact your credit score. Lenders see customers with a history of making timely payments on loans and bills as low risk. Hence, they offer such customers more favourable terms on personal loans.


Be clever when figuring out your personal loan EMI. You can do this by considering how this will affect your spending plans. Consistent expenses will significantly impact your ability to repay your loan.

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