The financial burden of education is increasing at an exponential rate. Not only are cost and quality of education increasing but so is the need. The need for higher education is imperative as the competition for jobs within all industries heats up. However, the rising cost of education is not too much to worry about how to come up with the relevant funds. There are a number of sources that provide education loan to students including banks, NBFCs, and online lenders. However, one thing you should know is that education loan interest rate is not low compared to other types of loans. The reason for that is the number of uncertain variables involved in education. Still, if your financial strategy is sound and you manage your EMIs perfectly, then you needn’t be bothered too much with education loan. But, an interesting question that you may wonder is how do banks calculate the EMI. Well, you may have guessed that they too use an EMI calculator, and you are not wrong, but what is the formula for that is used by the calculator. Let’s find out:

Education Loan EMIs

Generally, there are two ways to calculate EMIs for loans. One is the flat interest rate method and the other is the reducing balance method. To calculate the EMIs for education loan, the banks use reducing balance method. The formula for the same is:

EMI = [P x R x (1+R)^N]/[{(1+R)^N}-1]

The P in the equation denotes Principal Loan Amount while R denotes Monthly basis Rate of Interest, and Tenure of loan s denoted by N.

Instant Education Loan up to INR 2 Lacs

Now that you know how banks calculate EMIs on Education loan, you may be content with the education loan interest rate offered by banks. However, as you may have noticed, banks also do not offer very low interest rates for education loan. Still, nothing is lost as the PaySense App is just a few taps on your phone away. You can avail up to INR 2 lacs of education loan instantly without any collateral. Furthermore, you can also use the EMI Calculator to know the exact amount of EMIs that you will be required to pay the beginning. It will help you in managing your financials accordingly.