What is the Full Form of EMI? – Factors, Formula and Benefits
EMI Full Form
The full form of EMI is Equated Monthly Instalment. EMI is a fixed amount of money you need to pay to a lender or merchant in case you have taken a loan or any other credit. The EMI component includes both the principal amount and the interest charged.
Factors Depending on EMI
Here are some of the factors depending on EMI :
1. Loan Amount
The EMI amount depends on the amount of the loan taken by the borrower.
2. Interest Rate
The interest charged by the lender on the loan is an important factor that determines the EMI amount.
3. Loan Tenure
The EMI amount is inversely proportional to the loan tenure. A longer loan tenure would result in a lower EMI and vice versa
4. Processing Fee
Lenders may charge a processing fee while approving a loan. This fee may be added to the loan amount and included in the EMI calculations.
Formula to Calculate EMI
The formula to calculate EMI is
- P x R x (1+R)^N/[(1+R) ^ (N-1)]
where P stands for principal amount, R is rate of interest and N is loan tenure.
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Benefits of EMI
1. Ease of Payment
You don’t have to physically go to the lender to pay the due amount. Just set-up an auto-debit with your bank with a fixed date, your EMI would get deducted directly from your bank account on the specified date.
2. Flexible Payment Options
Depending on your financial situation and income, the lender allows you to choose the amount per EMI and the payment duration.
3. No Lump sum Payment
EMI eliminates the need for lump sum payments, which may be difficult for many borrowers to manage. EMI allows borrowers to spread the cost of the loan over a longer period of time, making it affordable.
Final Word
EMI (full form – Equated Monthly Instalment) is a flexible and convenient option for borrowers to manage their finances while fulfilling their dreams and needs. It allows borrowers to enjoy the benefits of a loan without having to worry about large lump sum payments.And speaking of flexible EMI, why don’t you apply for Navi Cash Loan? You will get instant disbursal with minimal documentation and yes flexible EMI. Download the app and apply now.
