1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed payment amount a borrower makes each month to repay a loan. It includes both principal and interest components, with the interest portion being higher at the beginning of the loan term.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

Explanation: The formula accounts for compound interest over the loan period, ensuring each payment reduces both principal and interest.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and ensuring the installment fits your monthly budget before committing to a credit card installment plan.

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 loan cost.

Q2: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures mean higher EMIs but lower total interest.

Q3: Are there prepayment penalties?
A: Some credit cards charge prepayment fees. Check your card's terms before paying off installment plans early.

Q4: Why is my first EMI different?
A: The first payment may vary due to the date of loan disbursement and the interest calculation method.

Q5: Can I change my installment plan later?
A: Most credit cards allow converting new purchases to installments, but existing plans usually can't be modified.