1. What is Personal Loan EMI?

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.

2. How Does the Calculator Work?

The calculator uses the EMI formula:

Where:

• \( P \) — Principal loan amount
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan tenure in months

Explanation: The formula calculates the fixed payment amount that includes both principal and interest components that the borrower needs to pay monthly.

3. Importance of EMI Calculation

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

4. Using the Calculator

Tips: Enter the principal amount, monthly interest rate (as percentage), and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is monthly interest rate calculated?
A: Divide the annual interest rate by 12. For example, 12% annual rate becomes 1% monthly rate.

Q2: What affects my EMI amount?
A: EMI depends on three factors: loan amount, interest rate, and loan tenure. Higher amount or rate increases EMI, while longer tenure reduces EMI.

Q3: Can I reduce my EMI payments?
A: Yes, by either negotiating a lower interest rate or opting for a longer repayment tenure.

Q4: Does EMI remain constant throughout the loan term?
A: Yes, for fixed-rate loans the EMI remains the same. For floating-rate loans, EMI may change when interest rates change.

Q5: What's the difference between reducing balance and flat interest rate?
A: Reducing balance calculates interest on outstanding principal, while flat rate calculates interest on original principal for entire term.