1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower pays to a lender each month until the loan is paid off. It includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

Explanation: The formula calculates the fixed monthly payment that will completely pay off the loan over its term, including interest.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and ensuring the payments fit within your monthly budget.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate, and loan tenure in months. The calculator will show your monthly payment, total repayment amount, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures increase EMI but reduce total interest.

Q2: What's a good EMI-to-income ratio?
A: Financial experts recommend keeping EMIs below 40% of your monthly income.

Q3: Can I reduce my EMI after taking a loan?
A: Some lenders allow refinancing or tenure extension to reduce EMI, but this increases total interest.

Q4: Does EMI remain constant throughout the loan?
A: Yes, for fixed-rate loans. For floating rates, EMI may change with interest rate fluctuations.

Q5: How is interest calculated in EMI?
A: Early payments have higher interest component; principal portion increases over time.