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EMI Formula:
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EMI (Equated Monthly Installment) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. It is used to pay off both interest and principal each month, so that over a specified number of years, the loan is paid off in full.
The calculator uses the EMI formula:
Where:
Explanation: The formula calculates the fixed monthly payment that the borrower must make to the lender to repay the loan over the specified term, including both principal and interest components.
Details: Accurate EMI calculation is crucial for financial planning, budgeting, and understanding the total cost of borrowing. It helps borrowers assess affordability and compare different loan offers.
Tips: Enter the principal amount in BDT, annual interest rate as a percentage, and loan term in years. All values must be positive numbers.
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 the loan period?
A: For fixed-rate loans, EMI remains constant throughout the loan term. For floating-rate loans, EMI may change when interest rates change.
Q3: What is the typical loan tenure in Bangladesh?
A: Loan tenures in Bangladesh typically range from 1-20 years for personal loans and up to 25-30 years for home loans, depending on the lender and loan type.
Q4: Are there any additional charges besides EMI?
A: Yes, loans may include processing fees, insurance premiums, and other charges that are not included in the EMI calculation.
Q5: How can I reduce my EMI burden?
A: You can reduce EMI by opting for a longer tenure, making a larger down payment, or negotiating a lower interest rate with the lender.