EMI stands for equated monthly instalment: the same amount you pay every month until a loan is repaid. Each EMI pays part of the interest and part of the amount you borrowed.
What decides your EMI
- The amount you borrow (the principal).
- The interest rate the lender offers you.
- The tenure: how many months you take to repay.
A longer tenure lowers the EMI but means you pay more interest in total. A shorter tenure raises the EMI and lowers the total interest.
An example
Borrowing ₹5,00,000 at 12% a year for 36 months gives an EMI of about ₹16,607. Try your own numbers in our EMI calculator before you apply anywhere.
Before you borrow
- Keep your EMIs to an amount you can pay comfortably every month.
- Compare the full cost, not just the EMI: the interest rate, fees and charges.
- Read the Key Fact Statement the lender gives you.