What is the Full form of EMI?
The full form of EMI is Equated Monthly Instalment. EMI is a fixed sum payable to a moneylender by a borrower for a specified period at a particular date of every month. EMI consists of a principal sum and interest amount to be charged by a borrower to repay for a specified period of years to pay back the loan in complete. Therefore, it’s an unequal mix of the interest amount and principal amount.
The factor depends on EMI.
The EMI depends on many factors, including
- Interest rate
- Principal amount borrowed
- Annual or monthly resting period
- Tenure of the loan
The loan Amount is the borrowed amount or also referred to as the principal amount. The duration or tenure of the loan is the lender’s time to repay the whole loan along with interest. Lenders, for example, a bank, charge an interest rate.
Benefits of EMI
- EMI helps individuals to buy outside their monetary control by allowing them to pay in instalments.
- There is no intermediary, and individuals pay the EMI directly to the lender without any hassle of contacting an intermediary.