1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off along with interest.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (INR)
• \( r \) — Monthly interest rate (annual rate divided by 12 and 100)
• \( n \) — Loan tenure in months

Explanation: The formula calculates the fixed monthly payment that would completely pay off the loan (principal + interest) over its term.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan options before borrowing.

4. Using the Calculator

Tips: Enter the principal amount in INR, annual interest rate in percentage, and loan tenure in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect my EMI amount?
A: EMI depends on three factors - loan amount, interest rate, and loan tenure. Higher loan amounts or interest rates increase EMI, while longer tenures reduce EMI.

Q2: Can I reduce my EMI payments?
A: Yes, by either negotiating a lower interest rate or opting for a longer repayment tenure, though this increases total interest paid.

Q3: How does prepayment affect my EMI?
A: Prepayment reduces principal, which can either reduce EMI or loan tenure. Some lenders may charge prepayment penalties.

Q4: What's the difference between reducing balance and flat rate EMI?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on full principal for entire tenure.

Q5: Are there any hidden charges in EMI?
A: Some loans may have processing fees, insurance charges, or late payment penalties that aren't included in EMI calculation.