Question 1

How is EMI calculated?

Accepted Answer

EMI is calculated using the formula: EMI = P × r × (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 total number of months.

Question 2

Does a lower interest rate always mean lower total cost?

Accepted Answer

Not necessarily. A longer tenure reduces the monthly EMI but increases total interest paid. A shorter tenure means higher EMI but lower total cost. Use this calculator to find the right balance.

Question 3

What is the impact of a higher down payment?

Accepted Answer

A higher down payment reduces the principal (P), which directly reduces your EMI and total interest outflow. Even a 10% larger down payment can save significant interest over a long loan tenure.

Question 4

Can I prepay my loan to reduce EMI?

Accepted Answer

Yes, most lenders allow part-prepayment. This reduces the outstanding principal and can either reduce your EMI amount or shorten your loan tenure, depending on your lender's terms.

Question 5

Is EMI the same every month?

Accepted Answer

Yes, EMI (Equated Monthly Instalment) is a fixed amount paid every month for the full loan tenure. However, the split between principal and interest changes each month — early EMIs have more interest, later ones more principal.

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