One Reply to “How to calculate emi for loans?”

  1. Loan is kept as an account (with the principal amount as a negative balance) where your emi is credited and the monthly interest is debited. You can easily see that since emi is necessarily more than the monthly interest, the negative balance keeps on reducing to zero and the monthly reduction is = (emi – Monthly interest). From this you can calculate a formula for emi but it is a very complicated one for human being to calculate but easy for the computer. The dest officers use a chart that is given for a principal amount of one lakh (say) for various interest rates from which it is easy to calculate for customers requirement by simple multiplication.

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