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

Explanation: The formula calculates the fixed payment amount that includes 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 repay without straining your finances.

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 factors affect my EMI amount?
A: EMI depends on three factors - loan amount, interest rate, and loan tenure. Higher loan amounts or interest rates increase EMI, while longer tenures reduce EMI.

Q2: How does credit card EMI differ from regular EMI?
A: Credit card EMIs typically have higher interest rates than personal loans. Some cards offer no-cost EMIs where the interest is borne by the merchant.

Q3: Can I prepay my credit card EMI?
A: Most banks allow prepayment, but may charge a foreclosure fee. Check with your card issuer for specific terms.

Q4: What happens if I miss an EMI payment?
A: Late payments attract penalty charges and may negatively impact your credit score. Repeated defaults can lead to legal action.

Q5: Is there any advantage to choosing a shorter tenure?
A: Shorter tenures mean higher EMIs but lower total interest paid. Longer tenures have lower EMIs but higher total interest cost.