💸 LOAN EMI CALCULATOR
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. EMIs are used to pay off both interest and principal each month, so that over a specified number of years, the loan is paid off in full.
EMI Calculation Formula
The mathematical formula for calculating EMI is:
EMI = [P × R × (1+R)^N] / [(1+R)^N-1]
Where:
P = Principal loan amount
R = Monthly interest rate (annual rate/12/100)
N = Loan tenure in months
Frequently Asked Questions
What is the reducing balance method?
The reducing balance method calculates interest on the outstanding principal amount, which decreases as you pay EMIs. This method results in lower total interest compared to the flat interest rate method.
How can I reduce my total interest payment?
You can reduce total interest by: opting for shorter tenure, making partial prepayments, negotiating for lower interest rates, or maintaining a good credit score.
What factors affect EMI?
EMI depends on three main factors: Loan amount, Interest rate, and Loan tenure. Higher loan amounts and interest rates increase EMI, while longer tenures reduce EMI but increase total interest.
Is this calculator accurate for all types of loans?
Yes, this calculator works for home loans, personal loans, car loans, education loans, and any other loan that uses the reducing balance method for interest calculation.
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