1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower pays to a lender at a specified date each calendar month. It includes both principal and interest components.

2. How EMI Calculation Works

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (Rs)
• \( R \) — Monthly interest rate (annual rate / 12 / 100)
• \( N \) — 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. Understanding Loan Components

Details: Each EMI payment consists of both principal repayment and interest. Early in the loan, interest makes up most of the payment; later payments include more principal.

4. Using the Calculator

Tips: Enter the 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 reducing tenure affect EMI?
A: Shorter tenure increases EMI but reduces total interest paid. Longer tenure reduces EMI but increases total interest.

Q2: What's the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method (interest calculated on outstanding principal), which is standard for most loans.

Q3: Can I prepay my loan?
A: Most banks allow prepayment, often with some charges. Prepayment reduces total interest paid.

Q4: How does interest rate affect my loan?
A: Higher rates increase both EMI and total interest. Even 0.5% difference can significantly impact total payment.

Q5: Are there other charges besides interest?
A: Loans may have processing fees, insurance, etc. These are not included in EMI calculation.