Full Form and Meaning of EMI
EMI stands for “Equated Monthly Installment.” It is a fixed amount you pay every month to repay a loan. When you borrow money, like for buying a car, home, or a phone, you agree to pay back the loan in small parts over time. These payments are called EMIs.
Definition of EMI
EMI is a way of repaying loans in easy monthly payments. The total loan amount is divided into equal parts, and you pay the same amount every month until the loan is fully paid. The amount includes both the principal (the money you borrowed) and the interest (the extra money you pay to the lender).
Example of EMI
Let’s say you borrow ₹30,000 to buy a bike. The bank may ask you to pay ₹2,500 every month for 12 months. This ₹2,500 is your EMI, and it will include both the loan amount and interest.
Key Points About EMI
- The EMI amount stays the same every month.
- The interest on the loan can affect how much you pay.
- It helps people afford expensive items by breaking down payments into small amounts.
EMI makes loans easier to manage, helping people pay back in small, monthly steps.
