EMI
Also known as: Equated Monthly Installment, monthly installment
Equated Monthly Installment — a fixed payment a borrower makes every month to a lender against a loan, comprising both principal and interest.
EMI stands for Equated Monthly Installment. It is the fixed monthly payment a borrower makes to a lender against a loan — home loan, auto loan, personal loan, credit card EMI conversion, or consumer durable financing. Each EMI covers a portion of the loan principal plus the interest accrued for that month. The amount is calculated so that the loan is fully paid off across the tenure at the agreed interest rate.
In India, EMI is the dominant credit structure. Almost every major consumer purchase — from a smartphone to a refrigerator to a car — is available on EMI through banks, NBFCs, or credit-card EMI conversion. “No-cost EMI” is a common marketing variant where the interest is absorbed by the retailer or built into the sticker price, so the buyer’s total outlay equals the cash price.
Missed EMIs hurt your CIBIL score and trigger late fees. Before committing to an EMI plan, calculate the total amount you will pay over the tenure (EMI x months) and compare to the cash price. “No-cost” plans are often genuinely cost-free; longer-tenure financed plans almost never are.