1. What is EMI Calculation?

EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's 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)
• \( N \) — Loan tenure in months
• \( EMI \) — Equated monthly installment

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: Knowing your EMI helps in financial planning and budgeting. It allows borrowers to assess affordability before taking a loan and compare different loan options.

4. Using the Calculator

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

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 principal or rates increase EMI, while longer tenures reduce EMI (but increase total interest).

Q2: Can EMI change during loan tenure?
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 EMI (keeping tenure same) or reduce tenure (keeping EMI same), depending on lender's terms.

Q4: What is amortization schedule?
A: It's a table showing month-by-month breakdown of principal and interest components in each EMI payment.

Q5: Are there other charges besides EMI?
A: Some loans may have processing fees, prepayment charges, or late payment fees in addition to EMI.