Personal Loan

How EMI Breakups are Done in Personal Loans?


Are you planning to take a personal loan but worried about the EMI and the payback? A personal loan can be taken very easily, but it is more difficult to pay it back. Loans can be availed for various purposes. These include home loans, car loans, education loans, etc. The key components of loans are loan amount, loan tenure, and interest rates.

What is an EMI?

EMI is the Equated Monthly Installment. It is the sum of money that you as a borrower will pay a lender each month at a particular date. The principal amount is the sum of the applied interest and the EMI. Every loan has the idea of an EMI, and even credit card payments can be made in the form of an EMI.

Thus, the EMI amount for the stipulated tenure will be deducted from your bank account on a certain date. However, you might select the date of the EMI deduction at your convenience. There are different ways to calculate personal loan EMI. One such way is using the personal loan calculator.

The EMI Breakups

There are two components to an EMI: principal and interest. Typically, a personal loan has a maximum term of five years. However, a personal loan is better the shorter its term. A longer term can lower your EMIs and make repayments more manageable. Choosing a shorter term will raise your EMI and result in higher personal loan interest costs. The interest makes up a higher chunk of the EMI in the first few years of any loan. With time, interest decreases and principal amount remaining decreases, and the loan gets repaid.

How to calculate EMIs for your loan?

You can now calculate the EMI for your loan easily by yourself. It helps you check whether the EMI charged by your bank is correct. This can be done in three easy ways:

Calculating EMI using the mathematical formula

The following formula can be used to determine the EMI:

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


P= principal loan amount.

R= Rate of interest.

n= Number of monthly installments.

For example,

Assuming P= Rs 2 lakh,

R= 20 percent per annum= 20/12 = 1.66% per month

n= 24 months

EMI =[2,00,000 x 1.66/100 x (1+1.66/100) ^ 24 / [(1+1.66/100) ^ 24 – 1]

= 10,179

Calculating EMI using Excel

The Excel worksheet can be used to calculate your EMIs as well. The PMT function in Excel must be used to calculate EMIs.

The formula which EMI calculator formula in excel uses the following syntax: PMT (rate, nper, and pv).

The rate is the monthly interest rate (divide your annual rate by 12), nper is the total number of months of your loan, and PV is the loan amount borrowed.

Calculating EMI using EMI Calculator

Having trouble with the Excel approach and the mathematical formula? Don’t worry! We got your back. Use Piramal Finance’s Home Loan EMI calculator and easily check your EMI charges. Check out It costs nothing and is simple to use.

To calculate your EMI, enter the following information:

  • Loan amount: Enter the loan amount you’d want to take out.
  • Input the desired loan duration (in years) for which you intend to obtain a house loan: A longer tenure improves one’s eligibility.
  • Interest rate (percentage point per annum): Enter the interest rate.

Generally, EMIs are fixed, and the borrower must repay the loan in predetermined monthly installments. However, the loan EMIs can change if loans have floating interest rates and prepayments. Your monthly EMI is determined by several loan-related variables. Using the formula to calculate EMIs is a difficult operation that requires numerous calculations. An EMI calculator is a better option because it can calculate EMIs quickly once you enter your data.

What is a personal loan Amortization schedule?

A tabular representation of the loan, along with the EMI payment, is called a loan amortization schedule. It displays how an EMI payment is divided into principal and interest components. The investor can use this schedule to see how the loan is being repaid and how much is still owed. It includes details on the loan balance, interest rate, principal payment due, and the length of the payment period.

Therefore, this schedule is more helpful to loan borrowers so they can decide more wisely about prepaying or refinancing the loan. It also includes information about the interest that you can use to apply for tax exemptions.

Factors affecting Loan EMI

EMI is frequently not fixed throughout the loan and is subject to change for various factors. It includes the loan amount, interest rate, and loan tenure. Here, the total amount a person has borrowed is known as the loan amount. Interest rate refers to the rate at which loaned funds are subject to interest. Tenure of a loan refers to the period the borrower and the lender have set aside for loan repayment.

How to Get a Low-Interest Rate on Personal Loans?

If you are trying to apply for a personal loan, you must be looking out for some tips to save up and get a low-interest rate on your loan. You should keep in mind the following to get the lowest interest rate possible.

  • Keep your credit score high.
  • Maintain a strong repayment history
  • Compare the interest rates provided by various lenders.
  • Watch out for special offers

In a Nutshell

We hope now you can understand more about EMI calculation on personal loans. You can now easily apply for a personal loan online without fearing the technicalities of EMI breakups. You can easily calculate EMI using our website by clicking here.

Knowing how to calculate EMI for a loan now makes it easy to select an EMI that works for you by using the principal, interest rate, and tenure. You can quickly and easily apply for a personal loan through Piramal Finance in a few easy steps. Check out now