Flat vs Reducing Rate EMI Calculator

EMI (Equated Monthly Installment) is the fixed monthly payment that repays a loan over its tenure, made up of principal and interest combined. It's calculated from the loan amount, interest rate, and tenure using a standard amortization formula -- the same one this calculator uses, so you can see the exact monthly figure and how much of each payment goes to interest versus principal.Read more: Flat vs Reducing Rate: The 8% Car Loan That’s Actually 14%

Yes, almost always -- a prepayment reduces the outstanding principal, which reduces the interest charged on every remaining installment. The earlier in the loan you prepay, the more you save, since interest is front-loaded in most amortization schedules. Check for prepayment penalties with your lender first.Read more: The Credit Card Minimum Due Is Designed to Keep You Paying Forever

Flat-rate interest is charged on the full original loan amount for the entire tenure, even as you pay it down -- reducing-balance interest is charged only on what's still outstanding, so it falls every month as you repay. A flat rate quoted at the same percentage as a reducing-balance rate is effectively much more expensive; always confirm which method a lender is using.Read more: The Insurance Hiding Inside Your Car Loan

Usually, yes. Lenders price risk into the interest rate they offer, and a higher credit score signals lower risk, which typically qualifies you for better rates. It varies by lender and loan type, but it's one of the few loan-cost factors largely within your control before you apply.Read more: Rate Hikes Travel First Class, Rate Cuts Walk