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 EMI Calculation Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (Rs)
• \( R \) — 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 over its term with equal monthly payments.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and determining loan affordability before borrowing.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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

Q2: What is the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal each month, which is fairer than flat rate.

Q3: Can I prepay my loan to reduce interest?
A: Yes, prepayments reduce principal amount and thus total interest. Check with your bank for prepayment terms.

Q4: Does EMI remain constant throughout loan tenure?
A: Yes, in fixed-rate loans EMI remains same. In floating-rate loans, EMI may change if interest rates change.

Q5: How accurate is this calculator?
A: It provides standard EMI calculation. Actual EMI may vary slightly due to rounding or specific bank policies.