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 EMI Calculator Work?

The calculator uses the EMI formula:

Where:

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

Explanation: The formula calculates the fixed monthly payment required to pay off a loan over its term, considering compound interest.

3. Importance of EMI Calculation

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

4. Using the Calculator

Tips: Enter the principal amount in USD, annual interest rate in percentage, and loan term in years. 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 your principal faster, potentially saving interest and shortening the loan term.

Q2: Does EMI remain constant throughout the loan term?
A: Yes, for fixed-rate loans the EMI remains constant. For floating-rate loans, EMI changes when interest rates change.

Q3: How much of my EMI goes toward principal vs interest?
A: Initially, more goes toward interest. Over time, the principal portion increases while the interest portion decreases.

Q4: What factors affect my EMI?
A: EMI depends on loan amount, interest rate, and loan term. Higher amounts/rates increase EMI, while longer terms decrease it.

Q5: Can I prepay my home loan?
A: Most lenders allow prepayment, sometimes with prepayment charges. This can significantly reduce your total interest paid.