1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed monthly payment amount that a borrower must make to a lender to repay a loan over a specified period. It includes both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (decimal)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that pays off the loan principal and interest over the loan term.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their monthly financial commitment, plan their budget effectively, and compare different loan offers from various lenders.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect EMI amount?
A: EMI amount is affected by principal amount, interest rate, and loan tenure. Higher principal or interest rate increases EMI, while longer tenure reduces EMI.

Q2: Can EMI change during loan tenure?
A: For fixed-rate loans, EMI remains constant. For floating-rate loans, EMI may change when interest rates change.

Q3: How is interest calculated in EMI?
A: In the initial months, a larger portion of EMI goes toward interest payment. As the loan matures, more goes toward principal repayment.

Q4: What is prepayment and how does it affect EMI?
A: Prepayment reduces the principal amount, which can either reduce EMI or shorten loan tenure, depending on the borrower's choice.

Q5: Are there any hidden charges in EMI?
A: EMI includes only principal and interest. Other charges like processing fees, insurance, or late payment fees are separate.