Home
Back
EMI Calculation Formula:
| From: | To: |
EMI (Equated Monthly Installment) is the fixed payment amount made by a borrower to a lender at a specified date each calendar month. EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is fully paid off along with interest.
The calculator uses the standard EMI formula:
Where:
Explanation: The formula accounts for both the principal repayment and the interest charged on the outstanding loan amount.
Details: Calculating EMI helps borrowers understand their monthly financial commitment, plan their budget, and compare different loan options before making a decision.
Tips: Enter the principal amount in USD, annual interest rate in percentage, and loan term in years. All values must be positive numbers.
Q1: What factors affect my EMI amount?
A: The EMI depends on three main factors: loan amount, interest rate, and loan tenure. Higher loan amounts or interest rates increase EMI, while longer tenures reduce EMI.
Q2: Can I reduce my EMI payments?
A: Yes, by either negotiating a lower interest rate or opting for a longer loan tenure. However, longer tenures mean paying more interest overall.
Q3: What's the difference between fixed and floating rate EMI?
A: Fixed rate EMIs remain constant throughout the loan term, while floating rate EMIs change when the lender's reference rate changes.
Q4: How much of my EMI goes toward principal vs interest?
A: Initially, a larger portion goes toward interest. As the loan matures, more of each payment goes toward reducing the principal.
Q5: Are there prepayment options to reduce EMI burden?
A: Many lenders allow prepayment which can either reduce your EMI or shorten your loan tenure. Check for prepayment penalties in your loan agreement.