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. 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 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 with interest over the specified tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, compare loan options, and plan their finances accordingly.

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 interest rate?
A: Reducing balance calculates interest on remaining principal (lower interest over time), while flat rate calculates interest on full principal for entire tenure (higher total interest).

Q2: How does 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 prepayment charges?
A: Many banks (including Axis and ICICI) allow partial prepayments but may charge fees for full prepayment. Check your loan terms.

Q4: What factors affect loan approval?
A: Credit score, income, existing debts, employment stability, and loan-to-value ratio are key factors banks consider.

Q5: Can I change EMI during loan tenure?
A: Some banks offer EMI step-up/step-down options, but standard loans have fixed EMI. You can prepay to reduce tenure or EMI.