This article illustrates how to create a reducing balance EMI calculator excel sheet. The rate of interest diminishes with time in the case of loans based on reducing balance EMI. Therefore, taking loans based on reducing balance EMI can be a better deal than on fixed balance EMI.

For example, the **EMI** amount for a $5000 loan at 9% fixed interest rate for a 12 month period will be = $5000/12 + $5000*9%/12 = $454.17. On the other hand, the EMI amount at the reducing balance interest rate will be $437.26. Therefore, it can be a better deal to take a loan at the reducing balance interest rate even if the interest rate is a little higher. Follow the article to create a reducing balance EMI calculator in your excel sheet to find out the better deal for yourself.

**Table of Contents**hide

## Download Sample Workbook

You can download the sample workbook from the download button below.

## Steps to Create a Reducing Balance EMI Calculator in Excel Sheet

Assume you have secured a loan of $1000 at the annual rate of 14.49%. You can repay the loan in 12 equated monthly installments (EMI).

Follow the steps below to create a reducing balance EMI calculator excel sheet using that information.

### 📌 **Step 1: Calculate EMI Amount with PMT Function**

- First, enter the following formula in cell
**E8**to estimate the EMI amount. Here the**PMT function**returns negative numbers. Therefore a negative sign has been used at the beginning of the formula.

`=-PMT(E5/12,E6,E4,0,0)`

**Read More:** **How to Make EMI Formula in Excel (with Suitable Example)**

### 📌 **Step 2: Estimate Total Amount Payable**

- Then enter the following formula in cell
**E9**to calculate the total payable amount.

`=E8*E6`

### 📌 **Step 3: Calculate Total Interest**

- Next enter the following formula in cell
**E10**to get the total interest.

`=E9-E4`

### 📌 **Step 4: Create a Reducing Balance EMI Table**

- Now enter 1 to 12 in cells
**B13**to**B24**respectively. After that, enter the following formula in cell**C13**.

`=E4`

- Then, enter the following formula in cell
**D13**.

`=E9`

- Next, apply the following formula in cell
**E13**to calculate the monthly payment need to be made on the principal loan amount. Then drag the**fill handle**icon down to cell**E24**. Here the**PPMT function**also returns negative values as it considers the payment as cash outflow.

`=-PPMT($E$5/12,B13,$E$6,$E$4,0,0)`

- After that, enter the following formula in cell
**F13**to calculate the monthly payment need to be made on the interest. Then, drag the**fill handle**icon down to cell**F24**. Here the**IPMT function**also considers the payments as cash outflow. So a negative sign is used at the beginning to avoid a negative result.

**=-IPMT($E$5/12,B13,$E$6,$E$4,0,0)**

- Now enter the following formula in cell
**G13**to calculate the total monthly payment. You can see that the result is equal to the EMI amount as it must be.

`=SUM(E13:F13)`

- Now enter the following formula in cell
**H13**to calculate the remaining loan balance at the end of the month. Then, drag the**fill handle**icon down to cell**H24**.

`=C13-E13`

- After that, enter the following formula in cell
**I13**to calculate the total amount payable at the end of the month. Then, drag the**fill handle**icon down to cell**I24**.

`=D13-G13`

- Then enter the following formula in cell
**C14**. Next drag the**fill handle**icon down to cell**C24**.

`=H13`

- Then enter the following formula in cell
**D14**. After that, drag the**fill handle**icon down to cell**D24**.

`=I13`

**Read More:** **How to Create Reverse EMI Calculator in Excel (2 Easy Methods)**

### 📌 **Step 5: Finalize the EMI Calculator Sheet**

- Finally, you will see the following result.

- Now enter the following formula in cell
**E25**to verify the results. Then drag the**fill handle**icon to cell**G25**. Then you will see that the total payment made on the loan, the total payment made on interest, and the total amount payable match the results calculated earlier.

`=SUM(E13:E24)`

**Note:**

Don’t forget to use a negative sign before the formulas containing the financial function to avoid any negative results.

**Read More:** **Create Home Loan EMI Calculator in Excel Sheet with Prepayment Option**

## Conclusion

Now you know how to create a reducing balance EMI calculator in an excel sheet. Do you have any further queries or suggestions? Please let us know using the comment section below. You can also visit our **ExcelDemy** blog to explore more about excel. Stay with us and keep learning.

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