Question 1

What is EMI?

Accepted Answer

EMI (Equated Monthly Installment) is a fixed monthly payment made by a borrower to a lender on a specified date each month. It consists of both principal and interest components.

Question 2

What is the formula for EMI calculation?

Accepted Answer

The EMI formula is: 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 loan tenure in months.

Question 3

Does a higher tenure reduce EMI?

Accepted Answer

Yes, a longer loan tenure reduces your monthly EMI but increases the total interest paid over the life of the loan. A shorter tenure means higher EMI but less total interest.