1. What is the EMI Calculation?

The EMI (Equated Monthly Installment) calculation determines the fixed monthly payment a borrower makes to a lender that includes both principal and interest. It's commonly used for loans like mortgages, auto loans, and personal loans.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Loan principal amount
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Loan term in months

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

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What's included in an EMI payment?
A: EMI includes both principal repayment and interest charges for that month.

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

Q3: How does loan term affect EMI?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q4: What's the difference between reducing balance and flat rate?
A: This calculator uses reducing balance method where interest is calculated on remaining principal. Flat rate calculates interest on original principal throughout.

Q5: Are there any other charges included in EMI?
A: Typically no. Insurance, processing fees etc. are usually separate from EMI.