What is Equated Monthly Installment (EMI)?
An Equated Monthly Installment (EMI) is a fixed payment made by a borrower to a financial institution on a specified date each calendar month. EMIs are applied to both the principal loan amount and accrued interest so that over a specified tenure, the loan is fully paid off.
Frequently Asked Questions (FAQs)
How does loan tenure affect total interest?
Longer loan tenures result in lower monthly EMIs, but significantly increase the total interest paid over time. Shorter tenures raise your monthly EMI but reduce overall interest payout.
Can I make prepayment to reduce EMI?
Yes, making partial prepayments directly reduces your outstanding loan principal, which either lowers your subsequent EMIs or shortens your remaining loan duration.