EMI (Equated Monthly Instalment)
Definition
A fixed monthly payment that repays a loan's principal and interest over its tenure.An Equated Monthly Instalment is the fixed amount a borrower pays each month to repay a loan over its term. Each EMI covers part interest and part principal; early in the tenure most of it is interest, and the principal share rises over time. The EMI depends on three inputs — loan amount, interest rate and tenure.
Related guides
Related terms
- Principal — The original sum borrowed or invested, before interest.
- Compound Interest — Interest calculated on both the principal and previously accumulated interest.
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