EMI

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.