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. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off along with interest.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

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

3. Understanding Loan Terms

Details: The principal is the original sum borrowed. The interest rate is the cost of borrowing that principal. The tenure is the period over which you'll repay the loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What happens if I pay more than the EMI?
A: Paying more than your EMI can reduce your loan tenure and total interest paid, but check with Credit Bank PNG about prepayment terms.

Q2: Does the interest rate change during the loan term?
A: This calculator assumes a fixed interest rate. For variable rate loans, your EMI may change over time.

Q3: Are there other fees not included in this calculation?
A: This calculator shows principal and interest only. There may be processing fees, insurance, or other charges.

Q4: How does loan tenure affect my EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures increase EMI but reduce total interest.

Q5: Can I get a loan if my EMI is high compared to my income?
A: Lenders typically require that your EMI doesn't exceed 40-50% of your monthly income, but policies vary.