1. What is EMI?

EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's commonly used for credit card purchases and loans.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

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

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, budgeting, and comparing different credit card or loan offers. It ensures you can comfortably afford the monthly payments.

4. Using the Calculator

Tips: Enter the principal amount, annual percentage rate (APR), and loan tenure in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and interest rate?
A: APR includes both the interest rate and any additional fees charged by the lender, giving a more complete picture of borrowing costs.

Q2: How can I reduce my EMI payments?
A: You can reduce EMI by either negotiating a lower interest rate or opting for a longer repayment tenure (though this increases total interest paid).

Q3: Is there any prepayment penalty on credit card EMIs?
A: Some lenders charge prepayment penalties. Check with your card issuer about their specific policies.

Q4: Why does my EMI remain fixed even if interest rates change?
A: For fixed-rate loans, EMI stays constant. For floating rates, EMI may change when interest rates are revised.

Q5: Can I change my EMI amount after taking the loan?
A: Generally no, unless you refinance the loan or convert to a different loan product with different terms.