1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower pays to a lender at a specified date each calendar month. For car loans, EMI payments include both principal and interest components.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (Rs)
• \( R \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( N \) — Loan tenure in months

Explanation: The formula calculates the fixed monthly payment that would pay off the loan over its term, including both principal and interest.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, plan their budget, and compare different loan offers from banks like Axis Bank and SBI.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: 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.

Q2: How does loan tenure affect EMI?
A: Longer tenure reduces EMI but increases total interest paid. Shorter tenure means higher EMI but less total interest.

Q3: Are there any hidden charges in EMI?
A: This calculator shows only principal + interest. Actual loans may have processing fees, insurance, etc. which aren't included here.

Q4: Can I prepay my car loan?
A: Most banks allow prepayment but may charge a penalty. Prepayment reduces total interest paid.

Q5: Why are interest rates different between banks?
A: Rates vary based on bank policies, your credit score, loan amount, and relationship with the bank.