Question 1

What is an EMI?

Accepted Answer

EMI (Equated Monthly Installment) is the fixed amount you pay every month towards your loan. It includes both principal and interest components.

Question 2

How is EMI calculated?

Accepted Answer

EMI is calculated using the formula: EMI = (P × R × (1+R)^N) / ((1+R)^N - 1), where P is principal, R is monthly interest rate, and N is tenure in months.

Question 3

Can I reduce my EMI?

Accepted Answer

Yes, you can reduce EMI by increasing the loan tenure, making prepayments, or negotiating a lower interest rate with your lender.

Question 4

What is the difference between EMI and principal?

Accepted Answer

EMI is the total monthly payment (principal + interest), while principal is only the loan amount portion of your payment.

Question 5

How does prepayment help?

Accepted Answer

Prepayment reduces the outstanding principal, which decreases the total interest payable and shortens the loan tenure.

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