1. What is the Personal Loan EMI Formula?

The PMT formula calculates the Equated Monthly Installment (EMI) for a personal loan. It's the standard method used by banks and financial institutions like BankBazaar to determine your monthly repayment amount.

2. How Does the Calculator Work?

The calculator uses the PMT formula:

Where:

• \( P \) — Principal loan amount (INR)
• \( r \) — Monthly interest rate (annual rate divided by 12)
• \( n \) — Loan term in months
• \( PMT \) — Monthly payment (EMI)

Explanation: The formula accounts for both principal repayment and interest payment in each EMI, with interest being higher in initial payments.

3. Importance of EMI Calculation

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

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What factors affect my personal loan EMI?
A: EMI depends on loan amount, interest rate, loan tenure, and sometimes processing fees or other charges.

Q2: How can I reduce my EMI amount?
A: You can opt for a longer tenure or negotiate a lower interest rate, though longer tenure means paying more interest overall.

Q3: Is the EMI fixed for the entire loan term?
A: Yes, in fixed-rate loans. For floating-rate loans, EMI may change if interest rates change.

Q4: What's the difference between reducing balance and flat interest rate?
A: This calculator uses reducing balance method (interest calculated on outstanding principal). Flat rate calculates interest on full principal for entire term.

Q5: Are there prepayment options available?
A: Most lenders allow prepayment after a lock-in period, often with some charges. This can reduce total interest paid.