Amortization Calculator For Simple Interest Loan

Simple Interest EMI Formula:

\[ EMI = \frac{P + I}{n} = \frac{P + (P \times r \times t)}{n} \]

Principal Loan Amount (P):

₹

Annual Interest Rate (r):

Time Period (t):

years

Loan Term (n):

months

Monthly Payment (EMI):

Total Interest:

Total Payment:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Simple Interest EMI Calculation?

The Simple Interest EMI calculation determines equal monthly installments for a loan where interest is calculated only on the original principal amount throughout the loan term. This differs from compound interest loans where interest is calculated on both principal and accumulated interest.

2. How Does the Calculator Work?

The calculator uses the simple interest EMI formula:

\[ EMI = \frac{P + I}{n} = \frac{P + (P \times r \times t)}{n} \]

Where:

\( P \) — Principal loan amount (₹ or currency)
\( I \) — Total interest (₹ or currency)
\( r \) — Annual interest rate (decimal)
\( t \) — Time period in years
\( n \) — Loan term in months

Explanation: The formula calculates the total interest over the loan period, adds it to the principal, and divides by the number of monthly installments.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their repayment obligations, plan their finances effectively, and compare different loan offers to make informed borrowing decisions.

4. Using the Calculator

Tips: Enter the principal amount in your currency, annual interest rate as a percentage, time period in years, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between simple interest and compound interest loans?
A: Simple interest is calculated only on the original principal, while compound interest is calculated on both principal and accumulated interest, making compound interest loans more expensive over time.

Q2: Are most loans simple interest or compound interest?
A: Most modern loans use compound interest calculations, but some short-term or informal loans may use simple interest. Always check your loan agreement.

Q3: How does the loan term affect EMI?
A: A longer loan term results in lower monthly EMIs but higher total interest paid over the life of the loan.

Q4: Can I prepay a simple interest loan?
A: Prepayment terms vary by lender. Some may allow prepayment without penalty, while others may charge fees. Check your loan agreement for specific terms.

Q5: Is this calculator suitable for all types of loans?
A: This calculator is specifically designed for simple interest loans with equal principal repayment. For compound interest loans or other repayment structures, different calculators should be used.