EMI

Equated Monthly Installment (EMI) refers to a fixed periodic payment made by a borrower to a lender each month to repay a loan over a specified tenure. Each installment comprises both the principal repayment and the interest component, structured in a way that keeps the total monthly payment constant throughout the loan period. EMIs are widely used for financing home loans, vehicle loans, education loans, and personal borrowings, making repayment predictable and manageable for borrowers.

Example: When a person takes a home loan, the bank calculates a fixed EMI amount that the borrower pays monthly until the loan—covering both principal and interest—is fully repaid.