Loan Parameters
Monthly Installment (EMI)
Loan Amortization Schedule
| Month | EMI | Balance |
|---|
Eligibility Parameters
Maximum Loan Eligibility
Based on the FOIR (Fixed Obligation to Income Ratio) of 50%, which is commonly used by banks to determine your repayment capacity.
EMI Calculator Overview
An EMI (Equated Monthly Installment) calculator helps you estimate the fixed monthly amount payable towards a loan over a selected tenure. The calculation is based on standard financial formulas used by banks and lending institutions. By adjusting the loan amount, interest rate, and tenure, you can understand how each factor impacts your monthly obligation and total repayment.
How EMI Is Calculated
EMI is calculated using a standard amortization formula that ensures equal monthly payments throughout the loan tenure. Each EMI consists of two components: principal repayment and interest on the outstanding loan balance. In the initial months, the interest component is higher, while the principal repayment gradually increases over time.
Ranges of Variables Used
EMI calculations depend on a combination of loan amount, interest rate, and loan tenure. Loan amounts can range from smaller values for short-term loans to higher amounts for long-term secured loans. Interest rates vary based on lender policies, borrower credit profile, and prevailing market conditions. Loan tenure can range from as short as one year to as long as thirty years.
Increasing the loan amount or interest rate leads to a higher EMI, while extending the tenure lowers the EMI but increases the total interest payable over the loan period. The calculator allows you to evaluate different combinations to find a balance between affordability and overall cost.
Understanding Total Interest and Repayment
The total repayment amount includes both the principal borrowed and the total interest charged over the loan tenure. While a lower EMI may reduce short-term financial strain, it often results in higher cumulative interest due to a longer repayment period. Choosing a shorter tenure increases the EMI but helps minimize the total interest paid.
Using an EMI calculator before applying for a loan enables informed financial planning, better loan comparisons, and a repayment strategy aligned with your income and long-term financial goals.