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 the loan is paid off in full over the specified tenure.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount ($)
• \( R \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment ($)

Explanation: The formula calculates the fixed payment amount that includes both principal and interest components for each month of the loan term.

3. Importance of EMI Calculation

Details: Knowing your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a car loan.

4. Using the Calculator

Tips: Enter the 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: What's included in the EMI payment?
A: Each EMI payment includes both principal repayment and interest charges for that month.

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: What is a good EMI to income ratio?
A: Generally, your total EMI obligations shouldn't exceed 40-50% of your monthly income.

Q4: Can EMI change during the loan term?
A: For fixed-rate loans, EMI remains constant. For floating rates, EMI may change if interest rates change.

Q5: Are there any prepayment options?
A: Many lenders allow partial or full prepayment, which may reduce your interest burden.