1. What is EMI Calculation for Loan Against FD?

EMI (Equated Monthly Installment) calculation for loans against fixed deposits helps borrowers understand their monthly repayment obligations when using their FD as collateral. This provides a secured loan option with typically lower interest rates.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (currency)
• \( R \) — Monthly interest rate (decimal)
• \( N \) — Number of monthly payments
• \( EMI \) — Equated monthly installment (currency)

Explanation: The formula calculates the fixed monthly payment required to repay a loan over a specified period, accounting for both principal and interest components.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers plan their finances, understand repayment capacity, and make informed decisions about loan amounts and tenures when using fixed deposits as collateral.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is the advantage of taking a loan against FD?
A: Loans against FD typically offer lower interest rates compared to unsecured loans since they are secured by your fixed deposit.

Q2: How does the interest rate affect EMI?
A: Higher interest rates increase the EMI amount, while lower rates reduce the monthly payment for the same principal and tenure.

Q3: Can I prepay my loan against FD?
A: Most banks allow prepayment of loans against FD, but terms and conditions may vary. Check with your lending institution.

Q4: What happens if I default on EMI payments?
A: The bank may liquidate your fixed deposit to recover the outstanding loan amount and interest.

Q5: Is there a maximum loan amount against FD?
A: Typically, banks offer loans up to 75-90% of the FD value, depending on the bank's policies and your creditworthiness.