1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes to a lender at a specified date each calendar month. It's used for personal loans, home loans, and other installment loans.

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 accounts for both principal repayment and interest payment components that change over the loan tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan offers effectively.

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 factors affect EMI amount?
A: EMI depends on three variables - loan amount, interest rate, and loan tenure. Higher amount/rate increases EMI, while longer tenure reduces it.

Q2: Can EMI change during loan tenure?
A: For fixed-rate loans, EMI remains constant. For floating-rate loans, EMI may change when interest rates change.

Q3: How does prepayment affect EMI?
A: Prepayment can either reduce EMI for same tenure or reduce tenure for same EMI, depending on lender's terms.

Q4: What's the difference between reducing balance and flat rate?
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: EMI calculation doesn't include processing fees, prepayment charges, or other loan-related fees which vary by lender.