Calculate EMI in Multiple Way

Read Following EMI Calculation Method

[1] Fixed interest rate method

[2] Reducing balance method

Let’s understand the two methods of interest calculation – fixed/simple interest calculation method and reducing balancing method. To attain more clarity on this, the following conditions shall be used –

• Loan worth is Rs. 1,50,000 = L
• Loan Tenure is 2 year =T
• Rate on interest is 13% = P

[1]
Interest Amount = L * P
Interest Amount = 150000 *13%
Interest Amount = 19500

[2]
2 Year Total Interest Amount = Interest Amount * T
2 Year Total Interest Amount = 19500 * 2
2 Year Total Interest Amount = 39000

[3] 
Total Outstanding Amount=2 Year Total Interest Amount+L
39000+1,50,000
189000

[4]
Convert to Monthly Basis EMI Amount
Total Outstanding Amount=189000/(L*12)
Total Outstanding Amount=189000/(2*12)
Total Outstanding Amount=7875