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's used to pay off both interest and principal each month so that over the loan tenure, the loan is paid off in full.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

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

Explanation: The formula calculates the fixed payment amount that includes both principal and interest components for each month.

3. Importance of EMI Calculation

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

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How does reducing tenure affect EMI?
A: Shorter tenure increases EMI but reduces total interest paid. Longer tenure reduces EMI but increases total interest.

Q2: What factors affect EMI amount?
A: EMI depends on principal amount, interest rate, and loan tenure. Higher principal/rate increases EMI, longer tenure decreases EMI.

Q3: Can EMI change during loan tenure?
A: In fixed-rate loans, EMI remains constant. In floating-rate loans, EMI may change if interest rates change.

Q4: How to reduce EMI burden?
A: You can reduce EMI by negotiating lower interest rate, increasing down payment (reducing principal), or opting for longer tenure.

Q5: Are there prepayment charges in HDFC loans?
A: HDFC Bank may charge prepayment penalties for certain loans, especially fixed-rate loans. Check with the bank for current policies.