1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates fixed monthly payments for a loan, including both principal and interest components. This formula is commonly used for refinancing credit card debt into a personal loan with fixed terms.

2. How Does the Calculator Work?

The calculator uses Bankrate's EMI formula:

Where:

• \( P \) — Principal loan amount ($)
• \( R \) — Monthly interest rate (annual rate / 12, as decimal)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment ($)

Explanation: The formula accounts for compound interest over the loan period, distributing payments equally across all months.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their monthly obligations when refinancing credit card debt, allowing for better financial planning and comparison between loan options.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why refinance credit card debt with a personal loan?
A: Personal loans often have lower interest rates than credit cards and fixed repayment terms, which can save money and help pay off debt faster.

Q2: How does interest rate affect EMI?
A: Higher interest rates increase both the EMI amount and total interest paid over the loan term.

Q3: What's better - longer or shorter loan tenure?
A: Shorter tenure means higher EMIs but less total interest. Longer tenure reduces monthly payments but increases total interest cost.

Q4: Are there fees not included in this calculation?
A: Yes, this doesn't account for origination fees, late payment fees, or prepayment penalties that some lenders charge.

Q5: How accurate is this calculator?
A: It provides a close estimate, but actual loan terms may vary based on credit score, lender policies, and other factors.