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What Is an EMI?

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An EMI Equated Monthly Installment is a financial term used in loan repayments. It's a quick and easy method to pay off any type of loan. When a borrower takes a loan from a bank or NBFC, the repayment of the loan is done mainly in specific monthly installments.  These fixed financial installments are known as EMIs. The amount of EMI is dependent on the principal loan amount, tenure and the interest rate. This monthly installment or EMI amount is supposed to be paid on a fixed date to the bank by cheque or by electronically. Throughout the loan tenure the EMI amount changes or remains the same? The changing of EMI amount depends on what choices the borrower makes while opting a specific EMI plan and paying it. Floating Interest Rate: If the borrower opts for a floating rate of interest, the amount of EMI will change every time a new floating rate is set by the lender. But the borrower can ask the lender to change the tenure of the loan instead of the amount of EMI. Prepaying the Lo