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| Parameters |
| 1. Loan Amount | The total amout that a borrower borrows.
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| 2. Interest Rate/Annual Percentage Rate(APR) | The annual interest rate applicable to the loan quoted by the lender of the fund.
Interest rates may be quoted on annual, semiannual, quarterly and monthly basis. |
| 3. Maturity | The tenure for which the loan is taken. Maturity is often quoted in years and months.
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| Case |
| A man wants to purchase a new car costing $15000. He wants to fund his purchase from a local bank who quotes an interest rate of 9%. Furthermore, the interest has to be paid twice every year (semiannual compounding) for a period of 10 years and 6 months. |
The EMI payments for this loan is calculated as follows:
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| a. Input loan amount (i.e $15000) in the loan amount input cell of the calculator. Change currency from the drop down list. |
b. Input 9 in the interest rate input cell corresponding to the interest rate charged by the bank. Change the compounding method from the drop down list
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c. Input 10 in the years input cell and 6 in the months input cell.
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d. Notice that the equivalent periodic interest rate and number of payment periods are automatically calculated.
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e. The EMI for the loan application is also calculated automatically on the basis of the information generated in (d).
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