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EMI Calculator
Prepayments & Fees
Know Your EMI
What is an EMI? An EMI, or Equated Monthly Installment, is a fixed payment made by a borrower to a lender on a specific date each month. It is composed of both the principal (the loan amount) and the interest accrued on the outstanding balance. Over the loan's tenure, the proportion of interest to principal in each EMI payment changes—more interest is paid at the beginning, while more principal is paid towards the end.
How is Interest Calculated? Most modern loans, including home loans and personal loans, use a reducing balance method. This means that interest is calculated each month only on the remaining loan amount. This is generally more beneficial for the borrower compared to a flat rate, where interest is calculated on the original loan amount for the entire tenure.
When to Make Prepayments: Prepayments are extra payments made to the lender in addition to your regular EMI. By paying down the principal balance faster, you reduce the total interest you'll pay over the life of the loan. The earlier you make prepayments, the more you save. It's an excellent way to become debt-free sooner.
