What is an EMI?

What is an EMI?

 An EMI is one of the first things that comes to your mind when you think of Loans, be it personal, business, vehicle, marriage, home, or business. However, before we proceed with EMI, note on one of the best loan aggregators in India, Buddy Loan is disbursing instant personalloans at a faster rate and with lower interest rates starting at 11.99%p.a. Their repayment options are better than ever and help you get an EMI option based out of your convenience and capability.  

Click here.

 EMI Acronym 

• EMI stands for Equated Monthly Instalments, which as the name itself suggests it is the amount that you pay back your lender every month on a fixed date. 
• EMI will be calculated based on main factors like Loan Amount taken, Tenure and Interest rate.
• Tenure is nothing but the time taken to clear the loan, more the tenure period, EMI will be less and vice versa. But the interest amount will increase in such case of long tenure.
• Interest will be calculated by the lender based on your Income, Previous credits, Market situations, Repayment capacity, etc.

 

Now that we have understood what EMI is, let us see the types of loans

1. Arrears EMI
2. Advance EMI

 

• Arrears EMI – Arrears EMI is also known as standard EMI where you pay the EMI at a fixed date every month until the tenure gets over to repay the complete Loan amount.

 

In this case, the lenders like Buddy Loan disburses the Requested loan amount (Principal amount) minus the processing fee of the Bank or that of any lender.

 

• Advance EMI – In this case, you pay the first EMI well in advance at the time of down payment. Hence the lender disburses the Requested loan amount (Principal amount) minus the processing fee of the Bank and minus the first EMI amount.  

 

This amount will be considered as the principal amount itself without any interest, thus reducing the principal amount borrowed. 

 

E.g.: You want to borrow ₹50,000 from Buddy Loan for your new favourite Mobile of ₹70,000 with a tenure of 1 year (12M)

PS you can easily calculate the EMI amount using any online EMI calculators.  

 

 PS you can easily calculate the EMI amount using any online EMI calculators

	Arrears EMI	Advance EMI
EMI Amount	₹4442	₹4398
Disbursal amount	₹49000 (50000-1000)	₹44602 (50000-1000-4398)
Down payment	₹21000 (70000-49000)	₹25398 (70000-44602)
Total Amount payable	₹74304 (21000+4442*12)	₹73776 (25398+4398*11)

 

Now you know which option to choose when you are applying for a loan. It is advised to choose Advance EMI if you can afford to pay one EMI along with the down payment. Else you can always choose Arrears EMI.

To apply for a loan, click https://www.buddyloan.in/

Conclusion

To add more benefits and enhance your credit score, preplanning your finances helps you reach and safe in the journey. EMI calculator not just helps you with the calculation but give you an introspective idea so that you can correlate you spends and loan repayment, savings and livelihood.