Loan Calculator In BD

EMI Formula:

\[ EMI = \frac{P \times R \times (1 + R)^N}{(1 + R)^N - 1} \]

Monthly Payment (EMI):

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1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed monthly payment amount for a loan in Bangladesh. It includes both principal and interest components, allowing borrowers to repay the loan in equal monthly installments over the loan term.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

\[ EMI = \frac{P \times R \times (1 + R)^N}{(1 + R)^N - 1} \]

Where:

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

Explanation: The formula calculates the fixed monthly payment that includes both principal repayment and interest charges, ensuring the loan is fully paid off by the end of the term.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers in Bangladesh plan their monthly budgets, compare different loan offers, and make informed borrowing decisions based on their repayment capacity.

4. Using the Calculator

Tips: Enter the principal amount in BDT, annual interest rate in percentage, and loan term in years. All values must be valid (principal > 0, interest rate ≥ 0, loan term ≥ 1 year).

5. Frequently Asked Questions (FAQ)

Q1: What is included in the EMI payment?
A: EMI includes both principal repayment and interest charges for that month. The interest component is higher in initial payments and decreases over time.

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

Q3: Are there any additional charges in loan EMI?
A: The basic EMI calculation includes only principal and interest. Additional charges like processing fees, insurance, or taxes are usually separate and not included in EMI.

Q4: Can I prepay my loan in Bangladesh?
A: Most banks in Bangladesh allow prepayment, but may charge a prepayment penalty. Check with your specific bank for their prepayment policies.

Q5: What happens if I miss an EMI payment?
A: Missing EMI payments may result in late payment fees, negative impact on credit score, and potential legal action if payments are consistently missed.