1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount a borrower makes to a lender at a specified date each calendar month. It includes both principal and interest components, calculated to pay off the entire loan over the loan tenure.

2. How Does the Calculator Work?

The calculator uses Bankrate's 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 monthly payment that would completely pay off the loan over its term, accounting for compound interest.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and ensuring the monthly payment fits within your budget before committing to 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 affects my EMI amount?
A: EMI depends on three factors - loan amount, interest rate, and loan tenure. Higher amounts/rates increase EMI, while longer tenures reduce it.

Q2: How does changing tenure affect my loan?
A: Longer tenures reduce EMI but increase total interest paid. Shorter tenures mean higher EMIs but lower total interest.

Q3: Is EMI the only cost for a personal loan?
A: No, there may be processing fees, prepayment charges, late payment fees, and other costs not reflected in the EMI calculation.

Q4: Can I prepay my loan to reduce interest?
A: Many lenders allow prepayment which can reduce total interest, though some charge prepayment penalties.

Q5: How accurate is this calculator?
A: This provides a close estimate, but actual EMI may vary slightly based on the lender's specific calculation methods and rounding policies.