DYK: How is an equated monthly instalment calculated
EMI amount constitutes of principal repayment and interest on the outstanding loan
Equated monthly instalments (EMIs) are an integral part of most urban families’ expenses. With easy availability of loans and repayment processes, people do not hesitate in borrowing. Moreover, paying in instalments makes it possible for us to buy big-ticket products and assets. From a mobile phone to a house, from a car to paying for education, you can borrow money for almost anything and pay back in instalments. But before you borrow money thinking that the instalments look affordable, know how various instalments, including EMIs, are calculated and what are the important factors to be considered before you borrow money.