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

Explanation: The formula calculates the fixed payment amount that would completely pay off the loan (principal + interest) over the loan term.

3. Importance of EMI Calculation

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

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 calculate EMI?
A: HDFC uses the standard EMI formula shown above, with interest calculated on a monthly reducing balance basis.

Q2: What factors affect EMI amount?
A: EMI depends on three variables - loan amount, interest rate, and loan tenure. Higher principal or rate increases EMI, while longer tenure reduces it.

Q3: Can I reduce my EMI?
A: You can reduce EMI by either negotiating a lower interest rate or opting for a longer repayment tenure (though this increases total interest paid).

Q4: Does EMI remain constant throughout the loan?
A: Yes, for fixed-rate loans. For floating-rate loans, EMI may change if interest rates change.

Q5: How is interest calculated in EMI?
A: In initial EMIs, interest component is higher. As principal reduces, interest portion decreases and principal portion increases (amortization).