EMI Formula:
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The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower pays to the bank each month. It includes both principal and interest components.
The calculator uses the standard EMI formula:
Where:
Explanation: The formula calculates the fixed monthly payment that will completely pay off the loan over its term.
Details: Knowing your EMI helps in financial planning and determining loan affordability. It shows how much you'll pay monthly and the total interest over the loan term.
Tips: Enter principal amount in Rs, annual interest rate in percentage, and loan tenure in months. All values must be positive numbers.
Q1: What factors affect EMI?
A: EMI depends on loan amount, interest rate, and loan tenure. Higher principal or rate increases EMI, while longer tenure reduces EMI but increases total interest.
Q2: How can I reduce my EMI?
A: You can reduce EMI by either negotiating a lower interest rate or opting for a longer repayment tenure.
Q3: Does EMI remain constant?
A: For fixed-rate loans, EMI remains constant. For floating-rate loans, EMI may change when interest rates change.
Q4: What is prepayment?
A: Paying more than your EMI reduces principal faster, saving interest. Kotak Bank may charge prepayment penalties on some loans.
Q5: How is interest calculated?
A: Interest is calculated monthly on the outstanding principal. Early in the loan, most of your EMI goes toward interest.