EMI full form – What is EMI- Concept,Process, Benefits ? Explained

 EMI full form

EMI Full Form -What is EMI ? It  is a banking term. EMI is a kind of loan that bank gives you in need or you purchase anything. EMI works as part of repayment of the loan that you have availed form a bank or any Loan company.

 
EMI full form is mentioned below :
Equated Monthly Installments

What is EMI?

EMI is an annual interest that a bank charges on your loan amount, whereas you pay by monthly installments. In short EMI means interest-free monthly installments. EMI is a convenient payment scheme because you pay a single amount at the end of the month and not by installments. Also, the finance charges is not applicable. You need not make any payments in every month which means that you do not have to worry about owing any EMI at the end of the month. Before availing an EMI to you, a bank sends a proposal to the borrower and advises him to opt for this EMI and pay this amount for the outstanding amount and then you are free of any EMI.

The EMI Process :

The EMI is not really expensive and it’s not complicated. You need to pay a sum of money towards EMI and this is known as pre payment. How much can you afford to pay to pay for EMI? Well, you might have a number of income which you can pay for EMI. It really depends on your budget. In the case of any necessity, you are able to pay it as per your financial condition. How much can you afford to pay for EMI? You can easily pay more than what the EMI term suggests. You can easily pay the EMI for longer time also if you don’t have any stress. The Conclusion EMI is a kind of loan that you will find almost in every households but you never used it before. It’s a kind of loan where you are able to pay through a pre-paid method.

The EMI Concept :

EMI money that is made for EMI repayment is made up of two parts: One is the principal and second is the interest. Both of these are added to the EMI amount. If your EMI amount is 200, you need to pay an additional 50 as EMI. The principal and the interest of EMI is similar to the amount of loan that you have availed from a bank. When you file a loan application from a bank, you can choose one of the four categories available, each category has EMI type of repayment and you can choose from the same based on your need:

1. Fixed Period of EMI Fixed Period of EMI means that the EMI is repayable over a fixed period of time ie – 6 months.

2. Variable Period of EMI Variable Period of EMI means that the EMI is repayable at the end of every quarter.

 

EMI Benefits :

EMI is really a hassle free loan that works and becomes easy to repay. EMI also offers you the benefit of loan security. EMI Savings This loan also offers you the chance to make some savings over a period of time. EMI Savings allows you to make the above EMI payments automatically from your bank account. EMI Withdrawal In order to meet your EMI payments, you need to make your EMI payments upfront but you don’t have to do it immediately. The Pains Of EMI Most people would agree that EMI is not for everyone. EMI gives you the opportunity to claim part of the loan amount from your employer or the EMI payments also take up a chunk of your income. Fees On default of EMI, you have to bear with some charges from your lender which makes EMI not very popular in banking industry.

Conclusion :

EMI is a kind of loan that is kind of responsible and the interest rates are always based on the level of risk involved in the bank’s working. It works as the third leg in the repayment chain. It is usually charged only when you purchase something or take a loan from a loan company.

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