What does it mean?
An EMI or Equated Monthly Installment is a fixed payment by the borrower to a lender on a specified date each calendar month. EMIs are used to pay off a sum of the interest and principal regularly so that the entire loan is repaid in a specified time period. EMIs are available even with the most common types of loans like student and personal loans in India.
Points to remember
- EMIs ensure that the borrower knows exactly how much payment is expected and when.
- There are different methods of calculating EMI rates like the flat rate method and the reducing balance method.