Wrong emi calculation

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 May 2016 DETAILED CASE HISTORY.
1)My son had taken a loan of Rs 3000000 from one HFC some 5 years back.on 18 year term on floating rate of interest
2To dispose off the loan at the earliest he paid off against principal outstanding balance from time to time. He had some Rs 910961 to be paid in 19 more installments at 9.5% ROI.His EMI was Rs 51831 accordingly
3)Whenever the EMI increases due to increase in rate of interest etc it takes immediate effect.But when it decrease due to our prepayment etc the company always delays a lot unless forced
4)On 01/05/2016 he again paid back Rs 298988 out of total payable balance of Rs 910961 and opted for 13 more installments to totally pay off the loan. Current Rate of Interest is 9.5%.After paying this Rs 298988 the outstanding principal balance as on date is Rs 611973 payable in 13 installments at 9.5% ROI
5)CORRESPONDING TO EMI FORMULA AND CALCULATION OF SBI AND OTHERS
EMI = [P x R x (1+R)^N]/[(1+R)^N-1], where P stands for the loan amount or principal,(P=611973) R is the interest rate per month [if the interest rate per annum is 9.5%, then the rate of interest will be 9.5/(12 x 100)], and N is the number of monthly instalments.(N=13) .By simply putting these values in the formulae EMI comes out to be Rs 49725 and NOT R s 51831.AS SHOWN BY HDFC IN THE AMORTIZATION SCHEDULE
6)CORRECT FIGURE SHOULD BE
Loan Amount:    Rs. 611973
Number of EMIs:    13
Annual Interest Rate:    .0950
Monthly EMI Payment:    Rs. 49724.71
Total Loan Amount Payable:    Rs. 646421.26
Total Interest Payable:    Rs. 34448.26
7)IN THE LAST MONTH of the Amortization Schedule SUPPLIED BY HDFC THE INTEREST COMPONENT(Always Decreasing Interest Method) HAS SHOOT UP TO Rs 28903.Last but one month interest will be only Rs 567 .HOW AND WHY?
TOTAL ACTUAL INTEREST IN LAST 13 MONTHS=Rs 34448 HDFC TOTAL INTEREST IN 13 MONTHS=Rs 61830
8).By HDFC method one is to loose a total of Rs 27378 /27382(EXTRA EMI OF Rs 2106X13 Months=Rs 27378) against interest value.THE AMORTIZATION SCHEDULE of HDFC DOES NOT SHOW ANYTHING ABOUT THE REFUND
   COMPERATIVE FIGURES ARE DETAILED BELOW
9)Opening Balance    ROI    EMI    INTEREST COMPONENT    PRINCIPAL COMPONENT    CLOSING PRINCIPAL
   HDFC 01/05/16 to 31/05/16 611973    9.5 51831    4845 46986 564987
01/06/16 to 30/06/16 564987    9.5 51831    4473 47358 517629
01/07/16 to 31/07/16 517629    9.5 51831    4098 47733 469896
01/08/16 to 31/08/16 469896    9.5 51831    3720 48111 421785
01/.09/16 to 30/09/16 421785 9.5    51831 3339 48492 373293
01/10/16 to 31/10/16    373293 9.5    51831    2955    48876 324417
01/11/16 to 30/11/16    324417 9.5    51831 2568    49263    275154
01/12/16 to 31/12/16    275154    9.5    51831    2178 49653 225501
01/01/17 to 31/01/17 225501    9.5    51831 1785 50046    175455
01/02/17 to 28/02/17 175455    9.5 51831    1389 50442 125013
01/03/17 to 31/03/17 125013 9.5    51831 990 50841 74172
01/04/17 to 30/04/17 74172    9.5    51831    587 51244    22928
01/05/17 to 31/05/17    22928    9.5    51831    28903 22928    0
   TOTAL INTEREST IN 13 INSTALLMENTS=61830
THE LAST INTEREST COMPONENT(Always Decreasing Interest Method) HAS SHOOT UP TO Rs 28903.Last but one month interest will be only Rs 567 .
FOR AN OUTSTANDING PRINCIPAL BALANCE OF Rs 22928 AS ON 01/05/17 INTEREST IS Rs 28903.HOW AND WHY?

OTHERS Month & Year    Starting Balance    Interest Paid    Principle Paid         EMI          Ending Balance
   May 2016       611973        4844.79    44879.92     49724.71        567093.08
   Jun 2016       567093.08       4489.49    45235.22        49724.71        521857.86
   Jul 2016        521857.86     4131.37     45593.34     49724.71        476264.52
   Aug 2016        476264.52        3770.43     45954.28     49724.71    430310.24
   Sep 2016     430310.24     3406.62     46318.09        49724.71        383992.15
   Oct 2016     383992.15        3039.94    46684.77     49724.71        337307.38
   Nov 2016     337307.38        2670.35        47054.36     49724.71        290253.02
   Dec 2016     290253.02        2297.84        47426.88     49724.72        242826.14
   Jan 2017        242826.14     1922.37     47802.35        49724.72     195023.79
   Feb 2017     195023.79     1543.94        48180.77        49724.71     146843.02
   Mar 2017     146843.02        1162.51     48562.21        49724.72    98280.81
   Apr 2017        98280.81    778.06     48946.65        49724.71        49334.16
   May 2017     49334.16        390.56     49334.16        49724.72     0
TOTAL INTEREST IN 13 INSTALLMENTS=34448
Please offer your comments

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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26 May 2016 As per my observation I have studied that the private banks does not revise the EMI's & as per the reply given by them it is said why you worry you will pay earlier.

However as per your case is concerned in the Repayment schedule last EMI should be of Rs.23110/- bank is incorrect in their schedule , However this are subject to if there is no pre-payment charges or no additional interest is levied by the bank

I suggest you get it ask from the bank or clarify from the higher authority or go to the grievance cell of the bank.