1. What is the Interest Calculation Formula?

The interest calculation formula \( I = EMI \times N - P \) calculates the total interest paid over the loan tenure in Indian Rupees. It helps borrowers understand the true cost of borrowing beyond the principal amount.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

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

Explanation: The formula calculates the difference between total payments made and the principal amount borrowed, which represents the interest cost.

3. Importance of Interest Calculation

Details: Understanding total interest paid helps borrowers make informed financial decisions, compare loan offers, and plan their finances effectively.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: Why calculate total interest paid?
A: It helps borrowers understand the true cost of credit and make better financial decisions when comparing loan options.

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

Q3: How accurate is this calculation?
A: This provides an accurate calculation of total interest paid based on the given EMI, tenure, and principal amount.

Q4: Can this be used for all types of loans?
A: Yes, this formula works for any loan with fixed EMI payments, including home loans, car loans, and personal loans.

Q5: What if I make prepayments?
A: This calculation assumes no prepayments. If you make prepayments, the actual interest paid would be lower than calculated.