Factors On Which EMI Depends
The EMI depends on many factors, including
- Rate of Interest
- Principal amount borrowed
- Tenure of the loan
Rate of Interest –
Every bank charges a set interest rate on the loan you take out. As a result, the Interest Rate is also required in order to calculate the exact amount of EMI. Because of the high-interest rate, high EMIs are calculated.
Amount Borrowed(Loan amount) –
The loan amount is the amount of money you want to borrow from a bank. As a result, when calculating the Equated Monthly Instalment, you must include the required loan amount. The principal amount has the ability to increase or decrease your EMI. If you take out a large loan, your EMI will be high as well.
Tenure –
You will also need to provide the loan tenure when calculating the EMI. If you want to pay a low EMI, extend the loan term, but this will increase the total amount of interest on your loan.
EMI Full Form – What is EMI?
EMI Stands for Equated Monthly Payment.
An equated monthly installment (EMI) is a fixed monthly payment made by a borrower to a creditor on a predetermined date. Each month, EMI is composed of a principal sum and an interest amount that a borrower must pay back over a set number of years in order to fully repay the loan. EMI is calculated using the loan amount, loan term, and interest rate charged by the bank on the loan.