Personal Loan

What is the formula for personal loan EMI? And how to do It.


EMI is short for equated monthly instalments. One needs to pay this monthly amount to the bank until their loan gets fully repaid. The money gets directed towards both the actual amount and the interest. Personal loan EMI or any other EMIs needs to be paid monthly. In the initial months, a more significant part of the amount is directed towards interest. Gradually towards the end, a higher portion of the EMI amount is used to repay the principal. The monthly EMI does not change, but the percentage of interest and principal will be adjusted accordingly. The article discusses how you can calculate loan EMI. 

What formula is used to determine personal loan EMI?

There is a need for a standardised formula that would be accepted everywhere. There is one such formula for calculating personal loan EMI. All online calculators use this formula to compute the result. You can use the same formula to calculate manually. 

The formula is:

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


1. EMI = Equated monthly instalment 

2. P = The principal amount

3. R = Rate of interest.

4. N = Tenure or period. 

This formula of personal loan EMI calculation is used to find the EMI for any loan amount. The formula is quite complicated. It can be challenging for people to do it manually. It is time-consuming and can be prone to errors. So, it is better to use an online calculator for the job. 

What results are overviewed in an EMI calculator?

  1. EMI: The EMI needs to be paid monthly to the creditor to pay off the loan. 
  2. Break-up for the total amount needed to be paid: One gets to see the loan amount payable to the creditor. The total amount includes processing fees, interest rate, and principal. An amortization table is made available for users to have a holistic view of their repayment obligations. 

What are the features of an EMI calculator?

  1. Graphical representation: One gets to know how much their principal amount is and the rate of interest applicable on their loan. This information gets displayed in the form of a pie chart. 
  2. Repayment table: This table has detailed illustrations of your loan repayment to help you understand how much you need to shell out each month, helping you plan your finance. 

What are the elements of the repayment table?

  1. Principal paid: A portion of the monthly payment is directed towards repayment of the principal amount. As the loan gradually matures, this portion keeps increasing every month. 
  2. Interest paid: A portion of the monthly payment is directed towards the interest rate. This portion of the personal loan EMI keeps reducing as the loan matures. 
  3. Total payable amount: It is the total amount that needs to be paid. It is the total sum of the interest and principal. 
  4. The outstanding balance of a loan: The ending balance of a particular period is the total amount the one owes to the bank after every payment. 

This table has monthly and yearly data. So, one can look at the data needed accordingly. 

What are the factors affecting personal loan EMI?

  1. The loan amount: A higher principal translates to a higher EMI. The lender gets to decide the maximum amount you can borrow. They make the decision based on your relationship with the bank, repayment capacity and many other factors. 
  2. Rate of interest: The higher the rate of interest for a loan, the higher the EMI will be. Here again, the bank or the lender gets to decide the rate. This, too, depends on a few factors, such as credit history, income, and repayment capacity. 
  3. Tenure of the loan: A longer tenure means lower EMI. But if someone chooses a longer tenure, then they might have to pay extra interest. The tenure usually ranges from 12 to 84 months. 

How can a personal loan EMI calculator be used? 

Online EMI calculators are way more convenient than the manual method. The manual method is long and tedious and can give the wrong result due to miscalculation. On the other hand, the digital process is simple and generates results in a few seconds. It also gives the proper breakup of the amount and explains details with the help of tables and charts. You can very conveniently use a personal loan EMI calculator. 

The following details need to be entered on the online EMI calculator: 

  1. The principal amount
  2. The loan tenure
  3. The rate of interest

And in no time, you will be able to see the result.

What are the benefits of a personal loan EMI calculator?

  1. You can compare loans with the digital calculator 
  2. Much quicker than manual calculation 
  3. You can choose different loan tenures and check the EMI for each. 
  4. With a personal loan EMI calculator, you can check your repayment schedule. 
  5. The repayment schedule that the bank offers can be verified using this calculator. 


It is always advised to take financial decisions after doing a lot of research. Taking a loan is a big financial step. A personal loan EMI calculator will help you compute and plan your monthly expenditure. Visit “Piramal Finance” to explore their financial offerings and to learn about a range of finance-related topics.