1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower pays to the lender each month. It's used for HDFC personal loans and is comparable to ICICI Bank's calculation method.

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 divided by 12, as decimal)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment (INR)

Explanation: The formula accounts for both principal and interest components of the loan, with the interest portion being higher in initial payments.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers plan their finances, compare loan offers, and understand the total cost of borrowing 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 HDFC's EMI compare to ICICI?
A: Both banks use the same standard EMI formula, but actual EMIs may vary based on their specific interest rates and fees.

Q2: What factors affect EMI amount?
A: EMI depends on loan amount, interest rate, and tenure. Higher amounts/rates increase EMI, while longer tenures reduce EMI but increase total interest.

Q3: Can I prepay my loan?
A: Most banks allow prepayment, often with charges. Prepayment reduces total interest but check your bank's specific terms.

Q4: Are there other charges besides EMI?
A: Yes, loans may have processing fees, prepayment charges, late payment fees, etc. which aren't included in EMI calculation.

Q5: How accurate is this calculator?
A: It provides standard EMI calculation. Actual loan terms may vary based on your credit profile and bank's specific policies.