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's used to pay off both interest and principal each month so that over the loan tenure, the loan is paid off in full.

2. How Does the EMI 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 tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, compare loan offers, and plan their finances accordingly.

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's the difference between reducing balance and flat rate EMI?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on full principal for entire tenure, resulting in higher EMIs.

Q2: How does tenure affect EMI?
A: Longer tenure reduces EMI but increases total interest paid. Shorter tenure means higher EMI but less total interest.

Q3: Are there any prepayment charges?
A: ICICI and HDFC typically charge 0-2% for prepayment. Check current bank policies as they may change.

Q4: What's the minimum loan amount for personal loans?
A: ICICI and HDFC generally offer personal loans starting from Rs. 50,000 up to Rs. 40 lakhs, depending on eligibility.

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