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 consists of both principal and interest components.

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)
• \( n \) — Loan term in months
• \( PMT \) — Monthly payment (EMI)

Explanation: The formula calculates the fixed monthly payment that would completely pay off the loan over its term, including both principal and interest.

3. Importance of EMI Calculation

Details: Knowing your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a loan.

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: What happens if I pay more than the EMI?
A: Extra payments typically reduce the principal faster, potentially shortening the loan term and reducing total interest paid.

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

Q3: What's the difference between reducing balance and flat interest rate?
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: How does loan term affect EMI?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q5: Are there other charges included in EMI?
A: This calculator shows principal + interest only. Additional charges like insurance or fees may apply separately.