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. 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 would pay off the loan with interest over the specified tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan options before borrowing.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect EMI?
A: EMI depends on three factors - loan amount, interest rate, and loan tenure. Higher principal or rates increase EMI, while longer tenures reduce EMI.

Q2: How does prepayment affect EMI?
A: Prepayment reduces principal, which can either reduce EMI or shorten loan tenure, depending on the terms.

Q3: Are there other charges besides EMI?
A: Some loans may have processing fees, insurance, or other charges that aren't included in the EMI calculation.

Q4: What is the difference between reducing balance and flat rate?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on full principal for entire tenure.

Q5: How accurate is this calculator?
A: This provides a close estimate, but actual EMI may vary slightly due to rounding or specific bank policies.