1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed monthly payment amount for a loan, including both principal and interest components. It helps borrowers understand their repayment obligations.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (annual rate ÷ 12 ÷ 100)
• \( n \) — Loan tenure in months

Explanation: The formula distributes the loan repayment equally over the loan tenure, with the interest component being higher in the initial payments.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers plan their finances, compare loan offers, and ensure they can afford the monthly payments before committing to a loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

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

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

Q3: What is the difference between reducing balance and flat interest rate?
A: Reducing balance calculates interest on outstanding principal, while flat rate calculates interest on original principal throughout the tenure.

Q4: Are there any hidden charges in EMI calculation?
A: This calculator shows only principal and interest. Actual loans may include processing fees, insurance, or other charges.

Q5: How does prepayment affect EMI?
A: Prepayment reduces outstanding principal, which can either reduce EMI amount or shorten loan tenure, depending on the terms.