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 over time, the loan is paid off in full.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

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

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and ensuring the monthly payment fits within your budget before committing to a loan.

4. Using the Calculator

Tips: Enter the principal amount (loan amount), annual interest rate (as percentage), and loan tenure in years. The calculator will show your monthly EMI, total payment over the loan term, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect my EMI?
A: EMI depends on three main factors: loan amount, interest rate, and loan tenure. Higher loan amounts or rates increase EMI, while longer tenures reduce EMI.

Q2: How does prepayment affect my EMI?
A: Prepayments reduce the principal, which can either reduce your EMI if tenure remains same, or shorten your loan term if EMI remains same.

Q3: What's the difference between fixed and floating rate EMI?
A: Fixed rate EMI remains constant throughout the loan term, while floating rate EMI changes when interest rates change.

Q4: How much of my EMI goes toward principal vs interest?
A: Initially, more goes toward interest; as loan matures, more goes toward principal. This is called amortization.

Q5: Can I negotiate my EMI with the lender?
A: Yes, you can negotiate either the interest rate or the loan tenure to adjust your EMI to a comfortable level.