Question 1

What is EMI?

Accepted Answer

EMI (Equated Monthly Instalment) is the fixed monthly amount you pay to repay a loan. It includes both principal and interest components, calculated so that the loan is fully repaid by the end of the tenure.

Question 2

How can I reduce my EMI?

Accepted Answer

You can reduce your EMI by: 1) Negotiating a lower interest rate, 2) Extending the loan tenure, 3) Making a larger down payment to reduce the principal, or 4) Making prepayments to reduce the outstanding principal.

Question 3

What is the difference between flat rate and reducing balance rate?

Accepted Answer

A flat rate charges interest on the original loan amount throughout the tenure. A reducing balance rate (used by most Indian banks) charges interest only on the outstanding principal, which decreases with each EMI. Reducing balance results in lower effective interest paid.

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