Beginner’s guide on how to use an EMI calculator

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Owning a house, or a car, or anything, is a matter of great joy and pride to every individual. But not everyone can afford to make huge purchases in one go. Yet, every person deserves an opportunity to buy what they wish to. This opportunity has manifested itself in the form of EMI- Equated Monthly Installment.

What is EMI?

EMI or Equated Monthly Installment is the repayment of the money borrowed from the lender in fixed instalment on a specific date of every month. EMI is different from variable payment plans in which the borrower can pay differing amounts over an unfixed period till the loan is paid off. However, in EMI, the amount to be paid monthly and the duration for loan retirement is fixed at the beginning itself. It is definitely more assuring to the lender, as well as more sorted and planned for the borrower

EMI can be availed for loans, investments like a house, products like cars or even TVs or even for mortgages.

What is the advantage of EMI?

  • Freedom to buy expensive utilities
  • Easy to plan monthly budgetary
  • Flexible banking options
  • Wallet-friendly
  • Planned repayment of loans/mortgages
  • Assurity and trust between borrower and lender

How to calculate EMI?

Calculating EMI can be a crucial task and may often need a financial advisor or the loan company to do it for the customer. However, you can calculate your personal loan EMI using Upward’s personal loan EMI calculator. Prior to that though, it is essential to understand how EMI works and how is EMI usually calculated.

  • Reducing balance method
  • Flat-rate method

In Flat-rate method, the total loan amount is added with the total interest and divided by the stipulated period of time assigned for the re-payment of loan.

Assume ‘P’ to be the principal amount, ‘r’ to be the fixed rate of interest, ‘I’ to be the total interest amount and ‘n’ to be the number of months assigned.


Here, note that the rate of interest is fixed and hence is not affected by the fluctuating market price. This also means that the borrower has to pay the same specific amount every month, irrespective of any situation.

The Reducing balance method for EMI calculation uses a formula. Interest is calculated on a reduced principal at varying intervals. In this, an option for yearly interest payment is available.

The formula used for Reducing balance method is (P x I) x ((1 + r)n)/ (t x ((1 + r)n)- 1)


I= Fixed rate

P= Principal

N= Number of payments made every month/year

n= number of months in a year

What is personal loan EMI calculator?

Now you can calculate EMI by yourself using the online EMI calculator like Upwards’ personal loan EMI calculator. To make it easy for you to calculate the monthly payment you have to make towards your lender, a personal loan calculator is a financial tool that helps you determine the amount you are liable to pay. Following is a step-by-step breakdown on how to use an EMI calculator.

  • You will need to mention the principal amount, i.e. the amount you borrow.
  • Type in the rate of interest mentioned in the loan sanction document or refer a reliable source for the exact rate.
  • Specify the number of months within which you wish to repay your loan.
  • Once you input this information, click ‘Calculate”.
  • The calculator will do the math for you and will give you the average monthly amount you will be required to pay.

To conclude, when you are taking a loan or before taking one, always ensure to use a personal loan EMI calculator to budget out your finances. If you see, that the EMI can be easily paid off then go for it. But if you see that the EMI is taking up half of your monthly income, then think before opting for a Loan.       

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