Equated Monthly Instalment - EMI

•  Info

1. What is EMI?

            EMI stands for ‘equated monthly instalment’. It is the monthly amount you must pay your lender to repay a loan or debt, such as a home loan, a car loan, a personal loan, etc. EMI is a popular repayment method, as it allows you to purchase expensive things and pay for them in easy instalments. For example, if you want to buy a new car and you do not have sufficient funds, you can take a car loan and pay it back via EMIs. You will just need to make a down payment, which is a lump sum that goes out of your own pocket upfront. 

    2. EMI Components
            

            Your EMI consists of two components: principal and interest. 

            Principal component: It is the repayment towards your original loan amount. In every EMI payment, some portion goes to principal repayment, which reduces your outstanding loan amount with subsequent EMIs.  

             Interest component: It is the repayment of interest in every instalment. Interest is calculated on the outstanding loan amount for each month and included in your EMI. 

In the initial period, the maximum portion of an EMI is interest. Later, principal repayment increases and the interest portion decreases correspondingly. 

     3. Types of EMI Loans

         There are multiple types of loans you can repay through EMIs, such as personal loan, home loan, car loan, etc. Let’s understand each of these in detail: 

Personal loan: A personal loan is an unsecured loan taken for short-term expenses, such as family vacations, home improvement, medical emergencies, etc. Unlike a secured loan, such as a car or home loan, a personal loan does not require collateral. These loans are generally offered at higher rates. You can use the Personal Loan EMI calculator to calculate your EMI on the personal loan and choose the best loan offer. 

Home loan: A home loan is taken to buy a house. As such loans are secured, the interest rate is lower than that for personal loans. Generally, home loans have a longer tenure (10 to 30 years) of repayment. 

It is desirable to check your EMI before proceeding further with your loan application. You can calculate your home-loan EMI using a home-loan EMI calculator.

Car loan: A car loan is also a secured loan taken to buy a car, where the car itself is the collateral. Hence, in the event of non-repayment, the lender can requisition the car. 

When purchasing a car, it is necessary to provide a portion of the total cost upfront as the down payment. The remaining amount can be borrowed from a bank as a loan and can be repaid in EMI. You can calculate your car loan by using a car loan calculator. 

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• Eligibility

1. Home loan eligibility Criteria
   
   

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• Documents

1. For Personal Loan
2. What is Home Loan Eligibility?
3. How much loan can i avail?