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. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off along with interest.

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/12/100)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment (INR)

Explanation: The formula calculates the fixed payment amount that includes both principal repayment and interest charges, spread equally over the loan tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their monthly financial commitment, plan their budget, and compare different loan options before borrowing.

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

Q2: How does prepayment affect EMI?
A: Prepayment reduces principal, which can either reduce EMI or loan tenure. Some banks charge prepayment penalties.

Q3: What is the difference between reducing balance and flat rate?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on full principal for entire tenure.

Q4: Are there other charges besides EMI?
A: Yes, loans may have processing fees, insurance, late payment charges, etc. which are not included in EMI calculation.

Q5: Can I change EMI during loan tenure?
A: Generally EMI remains fixed, but some banks offer step-up/step-down EMI options or allow restructuring in special cases.