Loan / EMI Calculator
Calculate monthly EMI, total interest and final payment amount.
Monthly EMI:
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Understanding Your Loan EMI
EMI (Equated Monthly Installment) is a fixed amount you pay to the bank every month to repay your loan. It consists of two parts: the principal amount (the money you borrowed) and the interest (the cost of borrowing).
How is EMI Calculated?
The mathematical formula for calculating EMI is:
E = P × r × (1 + r)ⁿ / ((1 + r)ⁿ - 1)
- P = Principal Loan Amount
- r = Monthly Interest Rate (Annual Rate ÷ 12 ÷ 100)
- n = Loan Tenure in Months
Reducing vs. Flat Interest Rate
Most banks use the Reducing Balance Method (which this calculator uses). In this method, interest is calculated on the outstanding principal balance. A Flat Rate calculates interest on the entire principal for the whole tenure, which is usually much more expensive for the borrower.
Frequently Asked Questions (FAQs)
1. Does EMI change during the loan tenure?
Usually, EMI remains fixed. However, if you have a "Floating Rate" loan (common for Home Loans), your EMI may increase or decrease if the RBI changes repo rates.
2. Can I prepay my loan to save interest?
Yes! Prepaying even a small amount towards your principal can significantly reduce your tenure and total interest payable. Check with your bank for any prepayment penalties.