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, calculated so that the loan is paid off in full over the loan term.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( EMI \) — Equated Monthly Installment (USD)
• \( PV \) — Principal loan amount (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that would pay off the loan with interest over the specified term.

3. Importance of EMI Calculation

Details: Understanding your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a 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: How does EMI change with loan term?
A: Longer terms reduce EMI but increase total interest paid. Shorter terms increase EMI but reduce total interest.

Q2: What's the difference between flat rate and reducing balance?
A: This calculator uses reducing balance method where interest is calculated on outstanding principal each month.

Q3: Can I prepay my loan to reduce EMI?
A: Prepayment typically reduces loan term rather than EMI, unless you request EMI recalculation.

Q4: Why is my actual EMI slightly different?
A: Banks may include processing fees or insurance premiums in the EMI, or use slightly different calculation methods.

Q5: How does changing interest rates affect EMI?
A: For floating rate loans, EMI changes when interest rates change. Fixed rate loans maintain the same EMI.