Loan EMI Calculator

Calculate your monthly installments, total interest cost, and view amortization schedule for personal loans, business loans, and more.

Loan EMI Calculator

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Current UAE personal loan rates typically range from 4% to 10%

Understanding Loan EMI Calculations

EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.

EMI Formula

The mathematical formula used to calculate EMI is:

EMI = P × r × (1+r)^n / [(1+r)^n - 1]

Where:

  • P = Principal loan amount
  • r = Monthly interest rate (annual rate divided by 12 and expressed as a decimal)
  • n = Total number of monthly payments (loan term in months)

Reducing Balance Method

UAE banks use the reducing balance method for loan calculations. This means that interest is calculated only on the outstanding principal amount. As you make payments, the principal reduces, and subsequently, the interest component decreases.

Special Case: 0% Interest Loans

For 0% interest loans, the EMI is simply the principal amount divided by the number of months. These are sometimes offered as promotional deals for consumer goods.

Total Interest and Payment

To calculate the total interest paid over the life of the loan:

  • Total Payment = EMI × Number of Payments
  • Total Interest = Total Payment - Principal

This calculator uses the standard formula for loan EMI calculations as recognized by financial institutions in the UAE and worldwide.