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## Introduction

A personal loan is a form of unsecured loan that you can borrow if you need funds to pay for your financial needs from a bank or financial institution. The lender verifies your loan request and approves it after you apply your loan request to a lender for a personal loan. The loan balance is disbursed into your bank account after this. Once you receive the loan sum, over the course of the loan repayment tenure, you will need to repay the lender.

A personal loan has a fixed repayment tenure with monthly repayments that need to be made over the entire tenure of the personal loan, known as EMI (equated monthly instalments). The EMI is calculated on the basis of certain key details, such as the amount borrowed, the interest rate for the personal loan and the tenure of the loan. One of the easy ways to calculate your personal loan EMIs is by using excel.

## Calculate Personal Loan EMI Using Excel

To use a personal loan EMIs calculator in excel sheet, you can use the MS-Excel PMT formula.

The PMT function is listed under the Excel financial functions. The feature helps to measure the cumulative payment (principal and interest) expected over a specific time period to settle a loan with a fixed interest rate.

For personal loan EMIs calculator in excel sheet, the full formula syntax is:

PMT (rate, nper, pv, [fv], [type])

Where,

rate = Personal loan interest rate (percent rate)

nper = The tenure of the loan (in months)

pv = The principal amount of the loan (present value)

are the required arguments (have to be specified) and

fv = the target cash balance after the last payment is made (is assumed zero if not specified)

type= 0 if payment is due at the end of a period (at the end of each month is the installment is monthly), and 1 if at the beginning are the optional arguments (can be ignored).

For example, consider a loan of Rs. 1,00,000 borrowed for a period of two years in monthly installments at an interest rate of 7.5% p.a.

Then the formula in excel will look like this:

## Calculate EMI Using the Mathematical Formula

By using a calculator or doing some calculations yourself, you can compute the EMI. The standard formula is:

[P x R x (1+R)^N]/[(1+R)^N-1]

Where

R = Personal loan interest rate (percent rate)

N = The tenure of the loan

P = The principal amount of the loan (present value)

Ensure that the rate and EMI interval units are the same. Typically, EMIs are paid monthly while the interest rate is charged per annum. Therefore, the interest rate in the formula will be

(R/12)*100

As the function uses the same equation, the EMI calculation formula will give you the same result as the PMT function.

It is important to note that these figures are based on the length of the loan being paid at a flat-rate. Furthermore, the findings do not contain any other expenses that might need to be charged along with the principal repayment and payment of interest.

## Facts You Should Know About Personal Loan EMI Calculation

• ### EMI payment includes the principal amount and interest due on the amount

You repay a portion of the major personal loan amount due when you pay your EMI, also known as the principal, and also pay the interest owing on the loan amount. Usually, relative to the principal, it's added to interest when you begin making EMI payments. However, your EMIs contribute more to the principal sum than interest payments as you keep getting closer to the final tenure of the loan.

• ### EMI amount is not more than 40% of your monthly income

Your EMI balance should not be more than 40% of your monthly income for any loan, even a personal loan. This is because every month, most individuals have a fixed income at hand that they can spend, and have other costs and financial commitments to account for. Additionally, revenue is often volatile. It is advisable to be on the safer side and not have an EMI that is more than 40% of one’s income.

• ### Your interest rate will vary on a range of factors

The interest rate you will be charged depends on a number of variables, including your salary, credit history, loan size, age, and many others. One of the most significant variables determining the sum is your credit history. The repayment of past or current loans and repayment of your credit card bills are primarily affected by your credit history. Usually, lenders and financial institutions will provide consumers with low credit risk with more favourable personal loan interest rates.

If you are looking for personal loans, one of the best places to find a loan that suits your needs is Finserv MARKETS. Look through their list of top personal loans and find the one that works best for you.

## FAQs

• ### ✔️How do I calculate EMI in Excel?

EMI is calculated in excel using the PMT function.

For personal loan EMIs calculator in excel sheet, the full formula syntax is:

PMT (rate, nper, pv, [fv], [type])

Where,

rate = Personal loan interest rate (percent rate)

nper = The tenure of the loan (in months)

pv = The principal amount of the loan (present value)

are the required arguments (have to be specified)

• ### ✔️What is the formula for EMI calculation?

Excel has a financial function PMT for EMI calculation.

• ### ✔️How do I create an EMI schedule in Excel?

You can create an EMI schedule in excel using PMT =, PPMT and IPMT functions to calculate the total amount of periodic payment, principal part of each payment and interest part of each payment respectively.

• ### ✔️Does Excel have an amortization schedule?

Yes. Excel does have an amortization schedule template. You can find the template here.

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