Learning Resources
Educational guides and articles about loans and EMI calculations
Master Your Loan Knowledge
Loans are a major financial decision. Our comprehensive guides help you understand EMI calculations, interest rates, loan types, and financial planning strategies.
Whether you're planning to take your first loan or refinance an existing one, these resources will help you make informed financial decisions.
Featured Articles
Understanding EMI: A Complete Guide
Learn what EMI is, how it is calculated, and why it matters for your financial planning.
Home Loan vs Plot Loan: Key Differences
Understand the differences between home loans and land loans, including interest rates, LTV limits, and approval process.
How to Get the Best Interest Rate on Your Loan
Tips and strategies to negotiate better interest rates with your lender and reduce your overall loan cost.
Prepayment Benefits: Reduce Tenure vs Reduce EMI
Comprehensive guide on loan prepayment options and how to choose the best strategy for your financial situation.
Understanding Loan-to-Value (LTV) Ratio
What is LTV, why banks use it, and how it affects your loan approval and interest rates.
Education Loan Moratorium Period Explained
Complete guide on education loan moratorium, interest accrual, and how it affects your repayment.
Personal Loan EMI Planning: A Practical Guide
How to plan your personal loan EMI and manage your finances while repaying.
Vehicle Loan Calculation: What You Should Know
Understanding vehicle loan EMI calculation, down payment strategies, and prepayment options.
Tax Benefits on Home Loans: Section 80C and 24(b)
How to maximize tax benefits on your home loan principal and interest payments.
Fixed vs Floating Rate Loans: Which is Right for You?
Comparative analysis of fixed and floating interest rates and when to choose each.
Frequently Asked Questions
What is EMI?
EMI (Equated Monthly Installment) is a fixed amount you pay monthly to repay your loan. It includes both principal and interest components, calculated using the RBI-accepted formula.
How is EMI calculated?
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 total months. This is the RBI-standard formula used by all Indian banks.
What is the difference between Fixed and Floating interest rates?
Fixed rates remain constant throughout the loan tenure, while floating rates change based on market conditions and RBI policy rates. Fixed rates provide stability, while floating rates can benefit if market rates fall.
What is LTV (Loan-to-Value)?
LTV is the loan amount expressed as a percentage of the property value. For example, if property value is ₹50L and loan is ₹40L, LTV is 80%. Banks use this to assess risk and set lending limits.
How does prepayment benefit me?
Prepayment reduces your outstanding principal, which decreases the interest you pay. You can use prepayment to either reduce your monthly EMI or tenure. This saves significant interest over the loan period.
What is a moratorium period in education loans?
Moratorium is a grace period where you don't pay EMI. However, interest still accrues and is added to the principal. After moratorium ends, your EMI is calculated on the increased principal amount.
Can I reduce my EMI after taking a loan?
Yes, through prepayment you can reduce your EMI. However, not all loans allow this. Check your loan agreement or consult your lender about EMI reduction options and any associated penalties.
What factors affect my loan interest rate?
Your credit score, income, employment status, existing loans, loan-to-value ratio, loan tenure, and current market conditions all affect your interest rate. A higher credit score usually gets you better rates.
Key Financial Concepts
Monthly Reducing Balance
The standard method used by all Indian banks. Interest is calculated on the reducing balance each month, so you pay more interest early in the loan period and more principal toward the end.
Interest Rate Types
Fixed: Rate doesn't change. Floating: Rate changes with market. Step-up: Rate changes at predetermined intervals. Choose based on your risk tolerance.
Loan Tenure
The period over which you repay the loan. Longer tenure means lower EMI but higher total interest. Shorter tenure means higher EMI but lower total interest cost.
Processing Fee
Charged by lenders at loan origination, typically 0.5-2% of loan amount. This is a one-time cost added to your loan amount. Negotiate with your lender for fee waiver or reduction.
Amortization Schedule
A detailed breakdown of each EMI payment showing how much goes to principal and interest. Early payments are mostly interest, while later payments are mostly principal.
Annual Percentage Rate (APR)
The true cost of borrowing including all fees. Different from the stated interest rate. Always compare APR across lenders for accurate comparison.
Best Practices for Loan Planning
Compare Multiple Offers
Don't settle for the first offer. Compare rates, tenures, and terms from multiple lenders to get the best deal.
Maintain Good Credit Score
A higher credit score helps you get lower interest rates. Pay bills on time and manage your credit responsibly.
Plan for Prepayment
If possible, plan to make lump-sum prepayments. This can save significant interest over the loan period.
Understand Hidden Costs
Enquire about processing fees, insurance, stamp duty, and other charges before finalizing the loan.
EMI Should Not Exceed 40-50% of Income
Follow RBI guidelines. Keep some income for other expenses and savings. Use our affordability calculator to find your limit.
Read Loan Documents Carefully
Understand all terms, conditions, penalties, and clauses before signing. Ask your lender to explain anything unclear.