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 the loan term, the loan is paid off in full.

2. How Does the EMI Calculator Work?

The calculator uses the 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 with interest over the specified term.

3. Importance of EMI Calculation

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

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How does loan term affect EMI?
A: Longer terms reduce monthly EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q2: What's a good EMI to income ratio?
A: Generally, EMI shouldn't exceed 40-50% of your monthly income to maintain financial stability.

Q3: Does EMI remain constant throughout the loan?
A: Yes, for fixed-rate loans. For floating-rate loans, EMI may change with interest rate fluctuations.

Q4: Can I reduce my EMI after taking a loan?
A: You may refinance to a lower rate or extend the term, but this increases total interest.

Q5: How much down payment should I make?
A: Typically 10-20% of vehicle value, but higher down payments reduce loan amount and EMI.