Loan Interest Rate Comparison Calculator

EMI Formula:

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

Principal Amount (P):

Interest Rate 1 (Annual):

Interest Rate 2 (Annual):

Loan Term:

years

EMI at %:

Monthly Difference:

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed monthly payment amount for a loan, consisting of both principal and interest components. Comparing EMIs at different interest rates helps borrowers understand the impact of interest rates on their monthly payments.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

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

Where:

$ P $ — Principal loan amount ($)
$ R $ — Monthly interest rate (decimal)
$ N $ — Number of monthly payments
$ EMI $ — Equated Monthly Installment ($)

Explanation: The formula calculates the fixed monthly payment required to pay off a loan over a specified term, accounting for both principal and interest.

3. Importance of Interest Rate Comparison

Details: Comparing loan offers with different interest rates is crucial for making informed borrowing decisions. Even a small difference in interest rates can significantly impact your monthly payments and total interest paid over the loan term.

4. Using the Calculator

Tips: Enter the principal amount, two different annual interest rates, and loan term in years. The calculator will show you the monthly payment for each rate and the difference between them.

5. Frequently Asked Questions (FAQ)

Q1: Why compare different interest rates?
A: Comparing rates helps you understand how much you can save with a lower interest rate and make better financial decisions when choosing between loan offers.

Q2: How does interest rate affect EMI?
A: Higher interest rates result in higher EMIs, as more of your payment goes toward interest rather than principal reduction.

Q3: What is a good interest rate for a loan?
A: Good rates vary by loan type and market conditions. Generally, rates below the current market average are considered favorable.

Q4: Can I negotiate interest rates with lenders?
A: Yes, many lenders are open to negotiation, especially if you have good credit history and stable income.

Q5: How often do interest rates change?
A: Interest rates can change based on central bank policies, economic conditions, and market competition among lenders.