A fixed monthly payment amount made by a borrower to a lender to repay a loan, consisting of both principal and interest components.
EMI is the standard loan repayment structure in India for home loans, personal loans, car loans, and business loans. Each EMI contains two parts: principal repayment and interest. In the early months, the interest component is larger; as the loan matures, more of each EMI goes toward principal (this is the amortization effect). EMI amount depends on three factors: loan amount, interest rate, and loan tenure. Longer tenure means lower EMI but higher total interest paid.
A ₹10,00,000 loan at 10% annual interest for 3 years: Monthly rate = 0.833%, Months = 36. EMI = ₹32,267. Total payment = ₹11,61,612, of which ₹1,61,612 is interest.
glossaryTermPage.reasons.accuracy
glossaryTermPage.reasons.compliance
glossaryTermPage.reasons.decisions
glossaryTermPage.reasons.efficiency
Shorter tenure = higher EMI but less total interest paid. Longer tenure = lower EMI but significantly more interest. Example: ₹50L home loan at 8.5% — 20-year tenure costs ₹24.3L in interest vs 30-year tenure costs ₹38.8L. Choose based on your monthly cash flow capacity.
Yes. Most loans allow prepayment (partial or full). For floating-rate loans, RBI mandates no prepayment penalty. Prepaying reduces either the EMI amount or the remaining tenure, saving significant interest over the loan life.
Interest calculated on both the initial principal and the accumulated interest from previous periods — 'interest on interest'.
The gradual write-off of the cost of an intangible asset (like patents, software, or goodwill) over its useful life, or the repayment of a loan in installments.
The process of comparing and matching a company's accounting records with its bank statement to identify and resolve any differences.
The net amount of cash and cash equivalents moving into and out of a business during a specific period.
glossaryTermPage.cta.subtitle