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 and interest components.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

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

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: Calculating EMI helps borrowers understand their repayment obligations, compare loan offers, and plan their finances accordingly.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What happens if I pay more than the EMI?
A: Paying more than the EMI reduces the principal faster, which can decrease total interest paid and shorten the loan term.

Q2: How does loan term affect EMI?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q3: What's the difference between reducing balance and flat rate interest?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal. Flat rate calculates interest on original principal for entire term.

Q4: Are there other charges not included in EMI?
A: Some loans may have processing fees, prepayment charges, or insurance costs not included in EMI calculation.

Q5: Can I change EMI during loan tenure?
A: EMI is usually fixed, but some lenders offer step-up/step-down EMI options or allow restructuring in special cases.