Understanding Your EMI

An Equated Monthly Installment (EMI) is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. It is 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 the Math Works

The formula used is: E = P x r x (1+r)^n / ((1+r)^n - 1).
In the early years of your loan, a large portion of your EMI goes towards Interest. As the tenure progresses, the Principal component increases.

Tips to Reduce Your Loan Burden

• Prepayment: Paying even one extra EMI per year can reduce your tenure by years.
• Tenure vs EMI: Choosing a longer tenure reduces your monthly EMI but drastically increases the total interest paid.
• Balance Transfer: If interest rates drop, consider moving your loan to a bank offering a lower rate.