Question 1

What is an EMI?

Accepted Answer

EMI stands for Equated Monthly Installment. It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. Equated monthly installments are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full.

Question 2

How does the loan tenure impact my total interest paid?

Accepted Answer

A longer loan tenure drastically reduces your monthly EMI, making it easier on your monthly budget. However, because you are holding the loan for a longer period, the total interest paid to the bank will be significantly higher compared to a shorter tenure.

Question 3

What is an amortization schedule?

Accepted Answer

An amortization schedule is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.

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