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 Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount
• \( R \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( N \) — Loan tenure in months

Explanation: The formula calculates the fixed payment amount that includes both principal and interest components for each month of the loan term.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a loan.

4. Using the Calculator

Tips: Enter the principal amount, annual interest rate, and loan tenure in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What factors affect EMI?
A: EMI depends on three variables - loan amount, interest rate, and loan tenure. Higher amounts/rates increase EMI, while longer tenures reduce it.

Q2: Can EMI change during the loan term?
A: For fixed-rate loans, EMI remains constant. For floating-rate loans, EMI may change when interest rates change.

Q3: How does prepayment affect EMI?
A: Prepayment can either reduce your EMI (if tenure remains same) or shorten your loan term (if EMI remains same).

Q4: What's 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.

Q5: Should I choose longer tenure to reduce EMI?
A: While longer tenure reduces EMI, you pay more total interest. Choose the shortest tenure you can comfortably afford.