1. What is EMI?

EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. It's used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off along with interest.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (annual rate divided by 12 and converted to decimal)
• \( n \) — Loan tenure in months

Explanation: The formula calculates the fixed monthly payment that would completely pay off the loan (principal + interest) over the loan tenure.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan options before committing to a loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect EMI?
A: EMI depends on three factors - loan amount, interest rate, and loan tenure. Higher loan amounts or interest rates increase EMI, while longer tenures reduce EMI.

Q2: How does prepayment affect EMI?
A: Prepayment reduces the principal amount, which can either reduce your EMI or shorten your loan tenure, depending on the terms of your loan.

Q3: Are there different types of EMI?
A: Yes, there are fixed-rate EMI (interest rate remains constant) and floating-rate EMI (interest rate changes with market conditions).

Q4: What is the difference between reducing balance and flat interest rate?
A: In reducing balance, interest is calculated on outstanding principal, while flat rate calculates interest on the entire principal for the whole tenure.

Q5: Does EMI include all charges?
A: EMI typically includes principal and interest. Other charges like processing fees or insurance may be separate.