1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower pays to the bank each month for a loan. It includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan period, ensuring each payment reduces both principal and interest.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly obligations, compare loan offers, and plan their finances accordingly.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is included in the EMI payment?
A: Each EMI includes both principal repayment and interest charges for that month.

Q2: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures increase EMI but reduce total interest.

Q3: Are there other charges not included in EMI?
A: Some loans may have processing fees, insurance, or other charges not included in EMI calculation.

Q4: Can I prepay my loan?
A: Most banks allow prepayment, often with certain conditions or fees. This would reduce total interest.

Q5: How often are EMIs collected?
A: EMIs are typically collected monthly on a fixed date, though some lenders offer other frequencies.