Loan EMI Calculator

EMI Calculator - Frequently Asked Questions

What is an EMI and how is it calculated?

EMI stands for Equated Monthly Installment. It's a 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. Our EMI calculator uses the standard formula: EMI = [P x R x (1+R)^N] / [(1+R)^N-1], where P is the principal loan amount, R is the monthly interest rate (annual rate / 12 / 100), and N is the loan tenure in months.

How does loan prepayment affect my EMI or tenure?

Loan prepayment means paying a part of your outstanding loan principal earlier than scheduled. This EMI calculator allows you to see the impact of a one-time prepayment. You can choose to either:

• Reduce Tenure: Keep your EMI the same, and the prepayment will shorten the loan duration.
• Reduce EMI: Keep your loan tenure the same, and the prepayment will lower your monthly EMI amount.

Making prepayments can significantly reduce the total interest paid over the life of the loan.

What is an amortization schedule?

An amortization schedule is a table detailing each periodic payment on a loan. It shows how much of each payment goes towards interest and how much towards the principal balance. Our EMI calculator generates a detailed amortization schedule, allowing you to see the breakdown for each month of your loan tenure, including the impact of any prepayments. You can also download this schedule as part of the PDF report.

Can I use this EMI calculator for home loans, car loans, or personal loans?

Yes, this is a versatile loan EMI calculator suitable for various types of loans, including home loans, car loans, personal loans, education loans, or any other fully amortizing loan. Just input your loan amount, interest rate, and tenure to get your EMI estimate.

How accurate is this EMI calculator?

This EMI calculator uses the standard mathematical formula for EMI calculation and aims for high accuracy for fixed-rate loans. However, the actual EMI from your bank might slightly differ due to factors like processing fees, insurance premiums added to the loan, or different methods of interest calculation (e.g., daily reducing balance vs. monthly reducing balance). Always confirm the exact EMI and loan terms with your financial institution.

What is the difference between fixed and floating interest rates for an EMI?

A fixed interest rate remains the same throughout the loan tenure, so your EMI amount is constant. A floating interest rate (or variable rate) is linked to a benchmark rate and can change during the loan tenure. If the benchmark rate changes, your EMI or loan tenure may be adjusted by the bank. This calculator primarily models fixed-rate EMIs. For floating rates, the initial EMI can be calculated, but it may change later.