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Written by Site Administrator
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Wednesday, 28 October 2009 05:49 |
EMI is equated monthly installment. Any loan that you take from a bank or a financial institution must be repaid with interest. These banks arrange to deduct this amount every month from your salary account on a fixed date in monthly installments called EMIs. EMIs can be deducted automatically (ECS) or through post-dated cheques that you issue to the bank during the time of disbursement of your loan.
An EMI has two components in it – the principal amount, and the interest amount. The total loan amount along with interest for all month of the tenure is first caculated and this amount is then divided into equal monthly installments. Generally, a reducing balance model is followed on EMIs. That is, the interest component will be higher than the principal component in the beginning of the loan. As the payment tersm goes by the principal component will increase the interest component will reduce.
To calculate your EMI on any of your loans, you can use our EMI Calculator.
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Last Updated on Wednesday, 28 October 2009 06:24 |
