1. 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. It includes both principal and interest components.

2. How Does the EMI Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (₹)
• \( r \) — Monthly interest rate (annual rate divided by 12 and then by 100)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment that would pay off the loan with interest over the specified term.

3. Importance of EMI Calculation

Details: Calculating EMI helps borrowers understand their repayment obligations, plan their finances, and compare different loan options before borrowing.

4. Using the Calculator

Tips: Enter the principal amount in rupees, annual interest rate in percentage, and loan term in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the difference between reducing balance and flat interest rate?
A: Reducing balance calculates interest on the outstanding principal, while flat rate calculates interest on the original principal for the entire term.

Q2: Can I prepay my Bank of Punjab loan?
A: Yes, but prepayment charges may apply depending on the loan type and terms. Check with the bank for specific policies.

Q3: How does loan tenure affect EMI?
A: Longer tenure reduces EMI but increases total interest paid. Shorter tenure increases EMI but reduces total interest.

Q4: What factors affect loan eligibility?
A: Income, credit score, existing obligations, employment stability, and loan-to-value ratio are key factors.

Q5: Are there any hidden charges in Bank of Punjab loans?
A: There may be processing fees, prepayment charges, or late payment fees. Always read the loan agreement carefully.