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EMI Formula:
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EMI (Equated Monthly Installment) is the fixed amount paid by a borrower to a lender at a specified date each calendar month. It includes both principal repayment and interest on the outstanding amount of the loan.
The calculator uses the EMI formula:
Where:
Explanation: The formula calculates the fixed monthly payment required to completely pay off a loan over its term, accounting for both principal and interest components.
Details: Accurate EMI calculation helps borrowers understand their monthly financial commitment, plan their budget effectively, and compare different loan offers from various lenders.
Tips: Enter principal amount in ₹, annual interest rate in percentage, and loan term in years. All values must be valid (principal > 0, interest rate > 0, term between 1-30 years).
Q1: What factors affect EMI amount?
A: EMI amount is primarily determined by three factors: principal amount, interest rate, and loan tenure. Higher principal or interest rate increases EMI, while longer tenure reduces EMI.
Q2: Can EMI change during the loan term?
A: For fixed-rate loans, EMI remains constant throughout the term. For floating-rate loans, EMI may change when interest rates are revised by the lender.
Q3: What is the typical home loan tenure in India?
A: Most banks in India offer home loans with tenure ranging from 5 to 30 years, with 20 years being the most common.
Q4: Are there any prepayment charges?
A: Many Indian banks allow partial prepayment without charges, but some may charge a fee for full prepayment. RBI guidelines have made prepayment charges more borrower-friendly.
Q5: What is the tax benefit on home loan EMI?
A: In India, borrowers can claim tax deductions under Section 80C for principal repayment (up to ₹1.5 lakh) and under Section 24 for interest payment (up to ₹2 lakh) per financial year.