EMI Calculation Formula:
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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 calculates the fixed monthly payment that would pay off the loan with interest over the specified term.
Details: Knowing your EMI helps in financial planning, comparing loan offers, and determining affordability before taking a home loan.
Tips: Enter the loan amount, annual interest rate, and loan term in years. The calculator will show your monthly EMI, total payment, and total interest over the loan term.
Q1: What factors affect my EMI?
A: EMI depends on three main factors: loan amount, interest rate, and loan term. Higher amounts/rates increase EMI, while longer terms reduce EMI but increase total interest.
Q2: How can I reduce my EMI?
A: You can reduce EMI by either increasing the loan term or negotiating a lower interest rate. However, longer terms mean paying more interest overall.
Q3: What's better - higher EMI for shorter term or lower EMI for longer term?
A: Shorter terms mean less total interest paid but higher EMIs. Choose based on your monthly budget and total cost preference.
Q4: Does EMI remain constant throughout the loan term?
A: Yes, in fixed-rate loans. For floating-rate loans, EMI may change if interest rates change.
Q5: What percentage of salary should go to EMI?
A: Financial experts typically recommend keeping EMIs below 40% of your monthly income.