The formula to calculate the monthly EMI is:
EMI=P×R×(1+R)N(1+R)N−1
Where:
EMI (Equated Monthly Installment) is the fixed monthly payment you make to repay a loan over a specified period. It includes both the principal and interest components of the loan. This calculation is crucial for budgeting and planning your finances when taking out a car loan.
Let's consider an example:
Using the formula to calculate the monthly EMI:
EMI=20,000×612×100×(1+612×100)60(1+612×100)60−1≈386.66 dollars per month
This means that the monthly EMI for this car loan is approximately $386.66 per month.