EMI Calculator Indian Bank

EMI Formula:

\[ EMI = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Equated Monthly Installment (EMI):

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1. What is EMI?

EMI (Equated Monthly Installment) is a 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 a specified number of months, the loan is paid off in full.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

\[ EMI = P \times \frac{r \times (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Principal loan amount (₹)
\( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
\( n \) — Loan tenure in months

Explanation: The formula calculates the fixed monthly payment that includes both principal repayment and interest charges over the loan period.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their monthly financial commitment, plan their budget effectively, and compare different loan offers from various lenders including Indian Bank.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect EMI amount?
A: EMI amount is determined by three main factors: principal amount, interest rate, and loan tenure. Higher principal or interest rate increases EMI, while longer tenure reduces EMI.

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

Q3: How does prepayment affect EMI?
A: Prepayment reduces the principal amount, which can either reduce your EMI or shorten your loan tenure, depending on the bank's policy.

Q4: Are there any hidden charges in EMI?
A: EMI calculation typically includes only principal and interest. Other charges like processing fees, insurance, or late payment fees are separate.

Q5: What is the difference between reducing balance and flat interest rate?
A: Reducing balance method calculates interest on outstanding principal, while flat rate method calculates interest on original principal throughout the tenure. EMI calculators typically use reducing balance method.