1. What is EMI Calculation?

EMI (Equated Monthly Installment) is the fixed monthly payment made by a borrower to a lender at a specified date each calendar month. It consists of both principal and interest components, calculated to pay off the entire loan amount over the loan term.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (INR)
• \( R \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( N \) — Number of monthly installments (loan term in years × 12)
• \( EMI \) — Equated Monthly Installment (INR)

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

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their repayment obligations, plan their finances, compare different loan offers, and make informed borrowing decisions.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is included in an EMI payment?
A: Each EMI payment includes both principal repayment and interest charges for that month.

Q2: How does loan tenure affect EMI?
A: Longer loan tenure reduces the EMI amount but increases the total interest paid over the loan term.

Q3: Are there any prepayment charges in Indian loans?
A: Many Indian lenders charge prepayment penalties, especially on fixed-rate loans. Check with your specific lender for details.

Q4: What is the difference between reducing balance and flat interest rate?
A: Reducing balance calculates interest on the outstanding principal, while flat rate calculates interest on the original principal throughout the loan term.

Q5: Can EMI change during the loan term?
A: For fixed-rate loans, EMI remains constant. For floating-rate loans, EMI may change when interest rates change.