What is the Full Form of EMI
Full Form of EMI
The full form of EMI is “Equated Monthly Installment”. An equated monthly installment (EMI) is a set monthly payment provided by a borrower to a creditor on a set day, each month. EMIs apply to both interest and principal each month, and the loan is paid off in full over some years. 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 rate and principal. You can know more on Wiki here.
Factor affecting EMI
In the above section, we have discussed the full form of EMI. Now we are going to see the factors that affect 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, and the duration of the loan is the lender’s time to repay the whole loan along with interest. Lenders, for example, Bank charges an interest rate. The product available on the EMI can be repaid monthly.
Benefits of EMI
- Earlier we discussed the full form of EMI and the factors which affect EMI. Now we are going to discuss the benefits of EMI.
- EMI helps individuals to buy outside their monetary control by allowing them to pay in installments.
- EMI does not impact the savings as they are required to pay minimum monthly payments instead of a lump sum.
- There is no intermediary and individuals pay the EMI directly to the lender without any hassle of contacting an intermediary.
Disadvantage of EMI
As you all know that everything that has some pros also has some cons with it. In this article we have started with the full form of EMI, then we went through the factors which affect the EMI. We also covered some advantages of EMI. Here in this section, we will cover the disadvantage of the EMI.
- The price rate of any product is greater than the actual rate of the product. It varies from 10% to 20% depending upon the products.
- In case due to any circumstances, you were not able to pay the EMI on time then the late fine is tagged with it which will affect the amount of EMI per month.
- EMI due can also affect your CIBIL score which will directly impact your financial state if you wish to take any loan from any bank.
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