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. It's used to pay off both interest and principal each month so that the loan is paid off in full over the specified tenure.

2. How Does the 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 completely pay off the loan over its tenure, including both principal and interest components.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a loan.

4. Using the Calculator

Tips: Enter 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 prepayment affect EMI?
A: Prepayment reduces principal outstanding, which can either reduce your EMI or shorten loan tenure.

Q3: Are there any hidden charges in EMI?
A: This calculator shows pure principal+interest EMI. Actual EMI may include insurance or processing fees depending on bank policies.

Q4: Can I change EMI during loan tenure?
A: Some banks offer EMI step-up/step-down options, but standard loans have fixed EMI throughout tenure.

Q5: Why does my actual EMI differ slightly from calculator?
A: Banks may use slightly different rounding methods or include other small charges in final EMI.