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. For car loans from ICICI or HDFC Bank, EMI payments are used to pay off both principal and interest each month.

2. How Does the Calculator 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 with interest over the specified term.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, compare loan offers, and plan their budget before taking a car loan from ICICI or HDFC Bank.

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: What is the difference between reducing balance and flat interest rate?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on original principal for entire tenure.

Q2: Are there any hidden charges in EMI calculation?
A: This calculator shows pure EMI. Actual loans may include processing fees, insurance, etc. which are not included here.

Q3: How does prepayment affect EMI?
A: Prepayment reduces principal, which can either reduce EMI or loan tenure. This calculator doesn't account for prepayments.

Q4: Is this calculator specific to ICICI/HDFC?
A: While the formula is universal, interest rates and terms may vary between banks. Check with your bank for exact rates.

Q5: Can I change EMI amount after loan starts?
A: Some banks allow EMI restructuring with revised terms, usually for a fee. Check with your lender for options.