The Full Form of EMI is Equated Monthly Installment.
Equated Monthly Installment (EMI) is a fixed payment amount that a borrower (Customer) pays to a moneylender at a specific date of each month for a specific period of time, it can be a Year, 6 months or even a 3 month. Full form of EMI is Equated Monthly Installment.
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Calculation of Equated Monthly Installment (EMI Full Form)
Therefore, the EMI calculation depends on three factors which are :
- Interest Rate: interest Rate charged by the moneylender.
- Loan Amount: The amount borrowed.
- Tenure of the Loan: The time provided by the lender to repay the entire loan including the interest amount.
Types of Equated Monthly Installment (EMI) Payment
- EMI in Advances: However, here EMI payment is made in advance to the bank wherein and the principal amount minus the processing fee, and the first EMI amount is disbursed to the borrower’s bank account.
2.EMI in Arrears: Therefore, Here the borrower has to pay EMI at the end of every month for a specific period of time.
Advantages of Equated Monthly Installment (EMI)
Therefore, the advantages of EMI are:
1.Freedom to Buy Expensive Utilities
2.Easy on Wallets
3.Flexible EMI Options by Banks
Disadvantages of Equated Monthly Installment (EMI)
Therefore, the Disadvantages of EMI are:
2.No Early Repayment
3.Charges on Skipping EMIs