Month | Principal Paid ($) | Interest Paid ($) | Balance ($) |
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Month | Principal Paid ($) | Interest Paid ($) | Balance ($) |
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What is an EMI?
EMI stands for Equated Monthly Installment. It is a fixed payment made by a borrower to a lender at a
specified date
each month. EMIs are used to pay off both interest and principal each month so that over a specified
number of
years, the loan is paid off in full.
How is EMI calculated?
EMI is calculated using the principal loan amount, interest rate, and loan tenure. The standard formula
is:
EMI = [P x R x (1+R)^N] / [(1+R)^N-1]
where P = Principal, R = Monthly interest rate, N = Number of monthly installments.
Can I prepay my loan EMI?
Yes, most lenders allow you to prepay your loan. Prepayment can help reduce your interest burden and
close the loan
early. However, some lenders may charge a prepayment penalty, so check your loan agreement for details.
Does EMI change if interest rates change?
If you have a floating rate loan, your EMI may change when interest rates change. For fixed rate loans,
your EMI
remains the same throughout the loan tenure.
What happens if I miss an EMI payment?
Missing an EMI payment can result in late fees, increased interest, and a negative impact on your credit
score. It
is important to pay EMIs on time to avoid these consequences.
Can I change my EMI amount?
Some lenders allow you to change your EMI amount by restructuring your loan or opting for
part-prepayment. Contact
your lender to know the available options.
Is EMI applicable only for loans?
EMI is commonly used for loans such as home loans, car loans, and personal loans. It can also be used
for other
financial products like consumer durable purchases and credit cards.