EMI = P × r × (1+r)^n / ((1+r)^n - 1), where P = principal loan amount, r = monthly interest rate (annual rate / 12 / 100), n = number of monthly instalments. This gives a fixed monthly payment.
Does a longer loan tenure reduce EMI?+
Yes, a longer tenure reduces EMI but increases total interest paid. For a ₹50L loan at 8.5%: 20 years = ₹43,391/month (total interest ₹54.1L), 30 years = ₹38,446/month (total interest ₹88.4L).
What affects my EMI amount?+
Three factors: principal amount (higher = higher EMI), interest rate (higher = higher EMI), and loan tenure (longer = lower EMI but more total interest). Even 0.5% rate difference significantly impacts total cost.
What is an amortization schedule?+
An amortization schedule shows the breakdown of each EMI into principal and interest components. Early EMIs have higher interest portions; later EMIs have higher principal portions. It helps track loan payoff progress.