The amount which is paid by the borrower each month to the lender against the loan amount is termed as EMI. It can be calculated for a car loan, home loan, bike loan, personal loan etc.
It is calculated by following below mentioned mathematical formula:
[P x R x (1+R)^N]/[(1+R)^N-1
where P stands for the loan amount or principal,
R is the interest rate per month [if the interest rate per annum is 11%, then the rate of interest will be 11/(12 x 100)],
and N is the number of monthly installments
This basic formula works behind EMI calculator also.
