How to Calculate Your Personal Loan EMI Using Excel

If you have applied for a personal loan before, you must already realise the value of a personal loan EMI calculator. These are free, online tools that help you plan the repayment of your personal loan. Calculating your personal loan’s EMI using Excel can help you better understand how personal loan EMI calculators work.

When it comes to applying for a personal loan, it is crucial to first understand your repayment options. This is where a personal loan EMI calculator comes in handy, providing an estimate of your monthly payments and allowing you to plan your finances effectively. You can also choose to calculate your EMIs using Excel, which can give you a better understanding of how such calculators work. 

The EMI calculation formula
 

Here is the formula that you can use to calculate the EMI of a loan:

EMI = (P * R/12) * ((1+R/12)^N) / [(1+R/12)^(N-1)]

Where P is the original loan amount, R is the annual interest rate, and N is the number of monthly instalments or the loan tenure.

How to calculate personal loan EMIs using Microsoft Excel?
 

To calculate personal loan EMIs using Excel, you must input the loan amount, annual interest rate on personal loan and loan tenure into separate cells. You must then use the formula “=PMT(B2/12,B3,B1)” in the EMI cell where B2 is the interest rate, B3 is the tenure, and B1 is the loan amount. For instance, if you wish to take a FIRSTmoney smart personal loan worth ₹6 lakh with an annual interest rate of 10.99% and a 24-month tenure, simply enter those values into the designated cells and apply the formula to calculate your EMI using Excel. 

Manual EMI calculation using the formula in Excel for EMI calculations

Microsoft Excel simplifies the EMI calculation formula in the following way –

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

The Excel formula depends on several factors:

• The “Rate” function represents the interest rate applicable to the loan. It determines the EMI when using MS Excel for calculation.
• “NPER” stands for the total number of monthly instalments or the loan tenure. It is an important factor in the EMI calculation formula which directly impacts the duration for which you will make repayments.
• The present value represents the principal amount (original loan amount).
• The future value (FV) is an optional parameter which is typically set to 0. It adds to the flexibility of the calculation process.
• The “type” parameter determines when the loan amount is due. It is generally set to 0 for end-of-period payments and 1 for payments due at the beginning of the month.

To calculate your personal loan’s EMI using a personal loan EMI calculator, you must use the formula “=PMT(B2/12,B3,B1)” in the EMI cell where B2 is the interest rate, B3 is the tenure, and B1 is the loan amount. You can use IDFC FIRST Bank’s personal loan EMI calculator to get an estimate of your loan’s monthly instalments, based on which you can make changes to the loan amount and tenure as per your finances.

Conclusion

Calculating your personal loan EMI in Excel is both straightforward and efficient. By utilizing the PMT function and inputting the loan amount, interest rate, and tenure, you can instantly determine a monthly repayment amount that fits your financial plan. This simple method not only saves time but also empowers you with greater clarity and control over your loan obligations, helping you make more informed borrowing decisions.