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 includes both principal repayment and interest on the outstanding amount.

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 pay off the loan over its term with interest.

3. Understanding Amortization

Details: Amortization is the process of spreading out a loan into a series of fixed payments over time. Each payment pays both interest and principal, with the interest portion decreasing over time as the principal is paid down.

4. Using the Calculator

Tips: Enter the loan amount in currency, annual interest rate in percentage, and loan term in months. The calculator will show the EMI, total payment, total interest, and detailed amortization schedule.

5. Frequently Asked Questions (FAQ)

Q1: What affects my EMI amount?
A: EMI is determined by three factors: loan amount, interest rate, and loan term. Higher amounts/rates increase EMI, while longer terms decrease it.

Q2: How can I reduce my total interest paid?
A: You can reduce total interest by either choosing a shorter loan term or making additional principal payments when possible.

Q3: Why is the interest portion higher at the beginning?
A: Interest is calculated on the outstanding balance, which is highest at the start of the loan, so early payments have a higher interest component.

Q4: Are there prepayment penalties?
A: This depends on your loan agreement. Some lenders charge prepayment penalties, while others allow partial or full prepayment without fees.

Q5: How does a down payment affect the loan?
A: A larger down payment reduces the principal amount, which lowers both your EMI and total interest paid over the loan term.