Question 1

What is EMI?

Accepted Answer

EMI (Equated Monthly Installment) is the fixed amount you pay every month toward a loan, covering both principal repayment and interest, until the loan is fully repaid over its tenure.

Question 2

How is EMI calculated?

Accepted Answer

EMI is calculated using the loan amount, the monthly interest rate (annual rate ÷ 12), and the number of monthly installments, using the standard reducing-balance EMI formula. Each installment is the same amount, but the split between interest and principal changes every month — early payments are interest-heavy, later ones are principal-heavy.

Question 3

Does a longer tenure always mean I pay less?

Accepted Answer

A longer tenure lowers your monthly EMI, but increases the total interest you pay over the life of the loan since you carry the outstanding balance for longer. It is a trade-off between monthly affordability and total cost.

Question 4

Should I prepay my loan if I have surplus cash?

Accepted Answer

Prepaying reduces the outstanding principal and can meaningfully cut total interest, especially early in the tenure — but check your loan for prepayment charges first, and compare the interest saved against what that money could earn if invested instead.

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