1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes to a lender each month. It considers the principal loan amount, interest rate, and loan term.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate divided by 12, in decimal)
• \( n \) — Number of monthly payments (loan term in years × 12)
• \( PMT \) — Monthly payment amount (USD)

Explanation: The formula accounts for both principal repayment and interest payment components that change over the loan term.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their repayment obligations, plan finances, and compare different loan offers.

4. Using the Calculator

Tips: Enter 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: Why does EMI remain constant?
A: EMI remains fixed, but the principal and interest components change - more interest is paid initially, shifting to more principal later.

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 included in EMI?
A: EMI typically includes principal and interest. Taxes, insurance, or fees may be additional.

Q4: Can I reduce my EMI?
A: Yes, by increasing loan term, reducing principal, or securing a lower interest rate.

Q5: How accurate is this calculator?
A: It provides standard EMI calculation. Actual EMI may vary based on specific lender terms and fees.