EMI – What Is And How Is?
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EMI – What is and How is?

Founder Director

In earlier, borrowing by any person was nearly as a crime. To borrow the money considered being a bad habit, it was socially banned in the Indian social system.  Those days money is limited, and banks usually preferred to lend creative businesses.

Well, not anymore. The Indian way of thinking has changed, and we are taking up the loan with much enthusiasm. You can get a loan for almost any purpose be it is repairing home, expensive electronic gadgets, or any dream vacation and many more. You can count on a loan!

The short form “EMI” has entered an average Indian’s vocabulary in good measure. Most media advertisement started quoting as monthly EMI of the product rather than its price thus tempting the reader to buy it.

What is EMI?

The full form of EMI is “Equated Monthly Installments”. It is self explanatory that the installment of the amount payable monthly and is equal in almost all cases across months. When the customers take a loan, this is the amount that the borrower is expected to pay every month till the loan period.

How is it calculated?

Before we look into how it is calculated, we need to understand what an EMI actually compose.  The lender is least bother that why you are taking a loan, the thing is to you need to pay back the loan amount along with the interest rates.

Nowadays there are various online providers which help the customer to compare all the interest rates and can easily select the best deal. Various EMI Calculators for Personal Loan are available on Online Portal. The final value will be calculated using the amount of the loan, interest rates and loan tenure.

An EMI is nothing but the combination of the principal amount and interest. In every EMI installment, you have to pay it back a portion of loan principal and portion of interest rates that you are liable for the whole loan tenure.

To understand this EMI, You need to know the types of interest rates that you may be charged. They are:

1.      Fixed rates:

Fixed interest rate avoids the interest rate risks as it remains constant throughout the repayment period of the loan.

2.      Floating Rates:

Floating rates loan will cost less than fixed rates loans. In return of paying low interest rates, the borrower take the risk of interest rates that charge will go up in the future.

EMI has become a regular expense column in our monetary budget.

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