EMI Full Form
The Full form of EMI is Equated Monthly Installment. EMI is a fixed amount payable by a borrower to a moneylender at a specific date of each month for a specific period of time. EMI consists of a principal amount and interest amount that a borrower is supposed to pay to lender over a specific number of years to pay off the loan in full. So, it is an unequal combination of principal and interest rate. The calculation of an EMI depends on three factors which are Interest rate, Loan amount and Tenure of the Loan. Interest Rate is the rate of interest charged by the moneylender, e.g. Bank, where Loan Amount is the amount borrowed or also called Principal amount and tenure of the loan is the time provided by the lender to repay the entire loan including the interest. The main advantages of EMI are that it gives you the power to buy beyond your monetary reach by allowing you to pay in instalments, there is no middleman, so you directly pay the EMI to the lender without the hassle of contacting a middleman and it does not hurt your savings as you are required to pay minimum regular payments instead of a lump sum amount.