1. What is the EMI Formula?

The EMI (Equated Monthly Installment) formula calculates the fixed payment amount a borrower makes to a lender each month. It's commonly used for NBP loans and other loan products.

2. How Does the Calculator Work?

The calculator uses the standard EMI formula:

Where:

• \( P \) — Principal loan amount (rupees)
• \( r \) — Monthly interest rate (annual rate divided by 12 and converted to decimal)
• \( n \) — Loan term in months

Explanation: The formula accounts for both principal repayment and interest payment components in each EMI installment.

3. Importance of EMI Calculation

Details: Accurate EMI calculation helps borrowers understand their monthly repayment obligations and plan their finances accordingly before taking a loan.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: What is included in an EMI payment?
A: Each EMI includes both principal repayment and interest payment components, with the interest portion being higher in initial payments.

Q2: How does loan term affect EMI?
A: Longer loan terms result in smaller EMIs but higher total interest paid over the life of the loan.

Q3: What is prepayment and how does it affect EMI?
A: Prepayment reduces the principal amount, which can either reduce the EMI or shorten the loan term, depending on the terms of the loan.

Q4: Are there other charges included in EMI?
A: This calculator computes only the principal and interest components. Other charges like insurance or processing fees are not included.

Q5: How accurate is this calculator?
A: This provides a standard EMI calculation. For exact amounts, consult with NBP as actual terms may vary based on specific loan products.