Emi Calculation Formula: Mastering The Art Of Financial Planning

Emi Calculation Formula: Mastering The Art Of Financial Planning

EMIs or Equated Monthly Installments have become a way of life for many urban Indians. From purchasing your home to buying a smartphone, EMIs have made it possible to afford things that we could not have, otherwise. But how do we calculate EMIs and be sure about the amount we are paying? The answer lies in mastering the art of financial planning and understanding the EMI calculation formula.

The EMI Calculation Formula

Before we take a deep dive into the EMI calculation formula, let’s first understand what EMIs are. EMIs are a fixed amount of money that you pay every month to the lender to repay your loan. This amount includes both the principal amount and the interest. EMIs are calculated based on the loan amount, tenure, and interest rate.

The EMI calculation formula is a mathematical equation that helps calculate the monthly payment of a loan. It is as follows:
EMI = [P x R x (1+R)^N]/[(1+R)^N-1]
EMI = Equated Monthly Installment
P = Principal amount of the loan
R = Rate of interest on a monthly basis. It is the annual interest rate divided by 12.
N = Loan Tenure in months
Let us consider an example to understand this better. Suppose you took a consumer durable loan of Rs. 70,000 with an interest rate of 12% per annum for 12 months. Then, using the EMI calculation formula, we can calculate your monthly installment as follows:
EMI = [70,000 x 1% x (1+1%)^12]/[(1+1%)^12-1]
EMI = Rs. 6,476
Therefore, you will have to pay an EMI of Rs. 6,476 every month for 12 months to repay your loan of Rs. 70,000.

The Importance of the EMI Calculation Formula

Understanding the EMI calculation formula is essential for financial planning. It allows you to calculate the exact amount you need to pay every month towards your loan. This, in turn, helps you plan your finances better and avoid any financial stress that may arise due to the loan repayment.
Moreover, knowing the EMI calculation formula helps you compare different loan options before choosing the one that suits you. You can calculate the monthly payments for each loan and choose the one with the lowest EMI. This way, you can save money on interest and finish the loan repayment early.

Bajaj Finserv Insta EMI Card

Talking about consumer durable loan, Bajaj Finserv offers an Insta EMI card that makes it easy to make purchases at no cost EMI. This card can be used to buy various consumer durables such as smartphones, laptops, home appliances, and furniture from partner stores. It allows you to make the purchase first and then repay the amount in easy EMIs over a period of time.
The Bajaj Finserv Insta EMI Card eliminates the need to go through a lengthy loan application process. All you need to do is swipe the card, and the amount will be converted into EMIs. You can choose the tenure and EMI amount that suits you best. The card also offers various pre-approved loan offers, customized based on your purchase history and creditworthiness.
Moreover, Bajaj Finserv Insta EMI Cardholders can avail of exclusive discounts and other benefits such as zero down payment, zero processing fees, and no-cost EMI on selected products. This makes it an excellent option for those looking to purchase big-ticket items and spread the payments over a period of time.


EMI Calculation Formula is a critical aspect of financial planning. It helps you plan your finances better and choose loan options that suit you best. The Bajaj Finserv Insta EMI Card, on the other hand, makes it easy to purchase big-ticket items with no cost EMI and other exclusive benefits. Mastering the art of financial planning and understanding the EMI calculation formula can go a long way in ensuring a stress-free financial future.