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EMI Calculation Formula:
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The EMI (Equated Monthly Installment) loan schedule shows the breakdown of each payment between principal and interest over the life of a loan. It helps borrowers understand how much of each payment goes toward reducing the principal versus paying interest.
The calculator uses the standard EMI formula:
Where:
Explanation: The formula calculates the fixed monthly payment required to fully repay a loan over its term, accounting for both principal and interest.
Details: Understanding your EMI schedule helps with financial planning, shows the true cost of borrowing, and reveals how much interest you'll pay over the loan term.
Tips: Enter the principal amount in USD, annual interest rate in percentage, and loan term in years. The calculator will show your monthly payment and a complete amortization schedule.
Q1: What happens if I make extra payments?
A: Extra payments reduce the principal faster, decreasing total interest paid and potentially shortening the loan term.
Q2: Why does most of my early payment go toward interest?
A: With amortizing loans, interest is calculated on the outstanding balance, which is highest at the beginning of the loan term.
Q3: How does loan term affect total interest?
A: Longer terms mean lower monthly payments but significantly more total interest paid over the life of the loan.
Q4: What's the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method where interest is calculated on the outstanding principal, which is more common and fairer than flat rate.
Q5: Can I use this for different payment frequencies?
A: This calculator assumes monthly payments. For weekly or biweekly payments, adjustments to the formula would be needed.