1. What is the Interest Calculation Formula?

The interest calculation formula \( I = EMI \times N - P \) calculates the total interest paid over a loan's tenure, where EMI is the monthly payment, N is the number of monthly payments, and P is the principal amount.

2. How Does the Calculator Work?

The calculator uses the interest calculation formula:

Where:

• \( EMI \) — Monthly payment amount
• \( N \) — Number of monthly payments
• \( P \) — Principal loan amount
• \( I \) — Total interest paid

Explanation: The formula calculates the total amount paid over the loan term and subtracts the principal to determine the interest portion.

3. Importance of Interest Calculation

Details: Understanding total interest paid helps borrowers compare loan options, make informed financial decisions, and plan their repayment strategy.

4. Using the Calculator

Tips: Enter the monthly EMI payment, number of payments, and principal amount. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Why calculate total interest paid?
A: Knowing the total interest helps borrowers understand the true cost of borrowing and compare different loan offers.

Q2: Does this calculation include other fees?
A: No, this calculation only considers the principal and monthly payments. Additional fees and charges are not included.

Q3: Can this formula be used for any type of loan?
A: Yes, this formula works for any fixed-rate loan with consistent monthly payments.

Q4: What if I make extra payments?
A: This formula assumes consistent payments. Extra payments would reduce the total interest paid and require a different calculation.

Q5: How accurate is this calculation?
A: This calculation provides an exact result for loans with fixed monthly payments and no prepayments or fee changes.