Year | Principal (A) | Interest (B) | Total Payment (A + B) |
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Understanding the formula to calculate EMI on an Education Loan is crucial for students and their families to plan their educational expenses effectively.
EMI = (P * r * (1 + r)^n) / ((1 + r)^n - 1)Within the formula,
P | indicates the principal loan amount |
r | characterises the monthly interest rate |
n | is the cumulative tally of monthly payments |
Suppose you are financing your education with a loan of INR 5,00,000 at an interest rate of 7.5% per annum for a tenure of 7 years (84 months). Here's how you can apply the formula:
EMI = (500000 * 0.00625 * (1 + 0.00625)^84) / ((1 + 0.00625)^84 - 1)
EMI = INR 7,255.09
Applying this formula manually can be challenging, but utilising an EMI calculator simplifies the process. It offers users a hassle-free way to estimate their monthly repayment obligations and plan their finances effectively.
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