How to Calculate Your Personal Loan EMI Using Excel?

Equated monthly installments (EMIs) are the installments that you pay to the lending institution when repaying a loan. EMIs are also becoming a popular option for purchasing high-value products because the lending institution provides you with immediate funds when paying for the product.

The amount of your EMI will depend on many factors like total loan value, the loan tenure, and the down payment made. Many EMI calculator tools, both online and offline, are available today to know your EMIs. Let us learn how to calculate your EMI amount using the offline tool Microsoft Excel.

Formula to Calculate EMIs Using MS Excel

Using an EMI calculator Excel sheet you get advantages like quick and accurate calculations, better planning, and analyzing different loan options. You need to use the following function in an Excel cell to calculate your EMI-

=PMT(RATE,NPER,PV,FV,TYPE)

Here,

Rate- Rate of interest on the loan (for EMI, this should be a monthly rate)

NPER- Total number of monthly installments

PV- Present value or the principal amount of the loan

FV- Future value or value that remains after the last payment has been made (it will be 0 here) 

TYPE- It can be either 0 or 1 (when the amount of installment is paid at the end of the month it is taken as 0 and when paid at the beginning of the month, it will be taken as 1)

How to Calculate Personal Loan EMI Using the Excel

EMI calculator in Excel is an effective way to know your EMI. You only need to enter the above-mentioned PMT function in a cell of a blank Excel sheet. If you do not have access to Excel, you can also use an online EMI calculator for the same purpose. The advantage of using an Excel EMI formula is that it allows you to customize the inputs and calculate for various scenarios. However, its limitations include not considering other fees, taxes, and interest rate changes.

Now, let us see how EMI calculation is done in Excel through an example.

Suppose you are taking a personal loan of INR 3,00,000 that you intend to pay back in 3 years.  The loan carries an interest rate of upto 25% per annum. First, you need to convert the annual interest rate into a monthly rate by dividing it by 12. The monthly rate of interest will then be 2.08%. The NPER represents the total EMIs you will pay in 3 years which will be 12 X 3 = 36. By using the EMI formula in Excel, as per the example the results will be displayed as -

Calculation of EMI
Loan amount	300000
Tenure	3 Years
NPER	36
Monthly Rate	0.01666666667
EMI	10,966.30

 

Calculation of EMI
Loan amount	300000
Tenure	3 Years
NPER	36
Monthly Rate	0.01666666667
EMI	=PMT(F7,F5,F4,0,1)

Thus, the amount of your EMI will be INR 10,966 in this case. The FV will be taken as 0 in the formula, and ‘type’ will be taken as 1, as you usually pay the EMI at the beginning of the month. If the EMI is paid at the end of the month, you should use 0 instead of 1. The monthly EMI will differ in this case.

Also read: All You Want To Know About Your EMIs

Points to Note About EMI Calculation

• The Excel formula takes a monthly interest rate as input, but your lending institution may provide you with an annual interest rate. Make sure you convert the annual rate to monthly by dividing it by 12.
• As interest rates keep changing from time to time, keep your Excel sheet formula updated by entering the latest interest rate.
• Keep aside some funds for emergency use and to cover your basic expenses when deciding the EMI amount you would be able to pay.
• Double-check all the values you enter in the Excel formula. Otherwise, your EMI might come out as incorrect due to human error and your budget planning will be disturbed.

Factors that Affect the EMI Amount

5 Factors Influence Your EMI Amount listed below:

• Loan Principal: The higher the principal amount, the larger the EMI.
• Interest Rate: Lower interest rates result in smaller EMIs.
• Loan Term: Longer terms lead to smaller EMIs but higher overall interest payments.
• Frequency of Payments: Monthly payments are standard, but more frequent payments can reduce EMIs.
• Prepayments: Paying off a part of the principal reduces EMIs and overall interest.

Understanding these factors empowers borrowers to make informed decisions about their loans. By considering these elements, you can better manage your finances and choose the EMI amount that aligns with your budget and financial goals.

Facts You Should Know About Loan EMI Calculation

There are some facts that you should know about loan EMI calculation:

• Formula Basics: Loan EMI calculation involves the formula EMI = [P x R x (1+R)^N] / [(1+R)^N-1].
• Principal Amount (P): The initial loan amount you borrow from the lender.
• Interest Rate (R): The rate at which interest is charged on the loan amount.
• Loan Tenure (N): The total number of monthly installments for loan repayment.
• Monthly Installment: EMI comprises both principal repayment and interest payment.
• Decreasing EMI: Often seen in home loans, where EMI reduces gradually over time.
• EMI Calculators: Online tools to simplify accurate EMI calculations.
• Prepayment Impact: Prepayment affects EMI calculation and total interest paid.
• Amortization Schedule: Detailed breakdown of EMI components over the loan tenure.
• Impact of Interest Rate Changes: Fluctuations affect EMI amounts.

Steps to Apply for a Personal Loan after Calculating Your Loan EMI

Follow these steps to apply for a Personal Loan for travel at Hero FinCorp:

Step 1: Visit the Hero FinCorp website or download the instant personal loan app.

Step 2: Fill out an online application form with your personal and professional details.

Step 3: Scan and upload the necessary documents.

Step 4: Review and accept the loan offer.

Step 5: Get disbursal directly into your bank account.

Conclusion

It is quite easy to calculate your EMI obligations using Excel once you know the right formula. However, you may also use online tools such as EMI calculators that are provided on most lending institutions’ websites. In these, you only need to fill in the required details, such as loan amount, interest rate, and loan tenure, to know your exact EMI amount instantly. Online tools are less prone to human errors and will provide you with the most up-to-date information regarding your loan. So, check with your lending institution if they have an online EMI calculator for calculating your monthly EMI.

Frequently Asked Questions

1. How can I create an EMI calculator in Excel?

To create an EMI calculator in Excel, you need to use the PMT function ( the financial functions) and input the loan details. You can then customize the spreadsheet to suit your needs and preferences.

2. What are the advantages of using an EMI calculator Excel?

Using a loan EMI calculator Excel offers several advantages, including quick and accurate calculations, the ability to compare different loan options, and the flexibility to adjust variables.

3. Are there any limitations to using an EMI calculator Excel?

Limitations of using an EMI calculator in Excel include the need to manually update the variables, and the possibility of human error when entering them.

4. Can I customize an EMI calculator Excel sheet to suit my needs?

Yes, you can customize an EMI calculator Excel sheet to suit your needs. You can modify the layout, add or remove variables, and even include graphs and charts to visualize the data.