1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes to a lender at a specified date each calendar month. Tesco Bank uses this standard formula to determine loan repayments.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (GBP)
• \( R \) — Monthly interest rate (annual rate / 12, as a decimal)
• \( N \) — Loan tenure in months

Explanation: The formula accounts for both principal and interest components of the loan payment, with interest being front-loaded in the repayment schedule.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, compare loan offers, and plan their finances accordingly before committing to a loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect my EMI amount?
A: The three main factors are loan amount, interest rate, and loan term. Higher amounts/rates increase EMI, while longer terms reduce EMI but increase total interest.

Q2: Does Tesco Bank charge any processing fees?
A: Tesco Bank may charge an arrangement fee which would be added to your loan amount. Check current terms as fees may vary.

Q3: Can I pay off my loan early?
A: Yes, Tesco Bank allows early repayment but may charge an early settlement fee depending on your loan terms.

Q4: How is interest calculated between payments?
A: Interest is calculated daily on the outstanding balance and compounded monthly.

Q5: What's the minimum/maximum loan amount?
A: Tesco Bank typically offers loans from £1,000 to £25,000, but actual limits depend on your creditworthiness.