EMI, Equated Monthly Instalment, refers to a predetermined fixed payment that borrowers make to lenders on a specific date each month. This regular instalment includes both the principal amount and the interest, allowing borrowers to gradually repay their loans over a set period. EMIs provide a structured repayment plan and are commonly used in various types of loans, such as home loans, car loans, and personal loans. Commonly, the EMI amount remains constant throughout the loan tenure, making it easier for borrowers to plan their finances. In the initial stages of the loan, a larger portion of the EMI goes towards paying the interest, while over time, a greater portion is allocated to repaying the principal. However, you may also get a reducing-balance EMI depending on the bank where your monthly instalments reduce after each payment. Calculating the EMI involves considering the loan amount, interest rate, and tenure. Changing any of these factors may either reduce or increase the EMI. EMIs are a convenient way to manage loan repayments, ensuring borrowers steadily reduce their debt. Missing EMI payments can result in penalties and negatively impact one’s credit score, so it’s essential to meet these obligations promptly.