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 time, 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
• \( R \) — Monthly interest rate (annual rate divided by 12)
• \( N \) — Loan tenure in months

Explanation: The formula calculates the fixed monthly payment that would be required to pay off a loan over its term, including both principal and interest components.

3. Understanding Loan Components

Details: Each EMI payment consists of both principal repayment and interest payment. Early in the loan term, a larger portion goes toward interest, while later payments have a larger principal component.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate, and loan tenure in months. The calculator will show your monthly EMI, total payment over the loan term, and total interest paid.

5. Frequently Asked Questions (FAQ)

Q1: How does loan tenure affect EMI?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures increase EMI but reduce total interest.

Q2: What's the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on original principal throughout.

Q3: Can I prepay my loan?
A: Most loans allow prepayment which reduces total interest. Some lenders charge prepayment penalties.

Q4: How does EMI change with interest rate changes?
A: For fixed-rate loans, EMI stays constant. For floating-rate loans, EMI changes when interest rates change.

Q5: What is amortization schedule?
A: A table showing the breakdown of each EMI payment into principal and interest components over the loan term.