The full form of EMI is Equated Monthly Instalment.
As the name suggests, an EMI represents a fixed payment amount that a borrower makes to a lender each month on a specific date. This payment covers both the principal loan amount and the interest accrued on the loan during the loan's tenure (02-Feb-2024).
Here's a breakdown of what an EMI includes:
- Principal Amount: This is the original amount of money borrowed.
- Interest: This is the fee charged by the lender for borrowing the money.
Therefore, when you pay an EMI, you are paying off a portion of the loan amount and the interest charged on that outstanding amount.
