1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed monthly payment amount required to repay a loan over a specified period, including both principal and interest components.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount (currency units)
• \( r \) — Monthly interest rate (decimal)
• \( m \) — Loan term in months

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

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their repayment obligations, plan their finances, and compare different loan options effectively.

4. Using the Calculator

Tips: Enter the principal amount in currency units, annual interest rate as a percentage, and loan term in months. All values must be valid (principal > 0, rate ≥ 0, months ≥ 1).

5. Frequently Asked Questions (FAQ)

Q1: What does EMI stand for?
A: EMI stands for Equated Monthly Installment, which is the fixed payment amount made by a borrower to a lender at a specified date each calendar month.

Q2: How is monthly interest rate calculated from annual rate?
A: Monthly interest rate = (Annual interest rate / 100) / 12. For example, 12% annual rate becomes 1% monthly rate.

Q3: What happens if the interest rate is zero?
A: With zero interest, the EMI simply becomes the principal amount divided by the number of months (P/m).

Q4: Does the EMI include both principal and interest?
A: Yes, the EMI payment includes both the principal repayment and the interest component for that month.

Q5: 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 change.