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 the loan term, 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 (LKR)
• \( R \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment (LKR)

Explanation: The formula calculates the fixed payment amount that includes both principal and interest components.

3. Importance of EMI Calculation

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

4. Using the Calculator

Tips: Enter principal amount in LKR, 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 factors - loan amount, interest rate, and loan tenure. Higher principal or rates increase EMI, while longer tenures reduce EMI.

Q2: How does prepayment affect EMI?
A: Prepayment reduces principal, which can either reduce EMI or shorten loan tenure, depending on the terms.

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

Q4: What is amortization schedule?
A: It's a table showing the breakdown of each EMI payment into principal and interest components over the loan term.

Q5: How to reduce EMI burden?
A: Options include negotiating lower interest rates, increasing loan tenure, or making a larger down payment to reduce principal.