EMI

EMI (Equated Monthly Installment) is the fixed amount you pay every month to repay a loan. Whether it is a home loan, car loan, or personal loan, the EMI stays the same throughout the loan tenure (for fixed-rate loans), making budgeting predictable.

The EMI formula: EMI = P x r x (1+r)^n / ((1+r)^n - 1), where P = principal, r = monthly interest rate, n = number of months. For a Rs 50 lakh home loan at 8.5% for 20 years, the EMI is approximately Rs 43,391. Total interest paid over 20 years: Rs 54 lakh — more than the original loan!

EMI has transformed consumer behavior in India. "No-cost EMI" options on e-commerce platforms let people buy phones, laptops, and appliances by splitting the cost into 3-12 monthly payments with zero interest. In reality, the interest is often built into the product price or subsidized by the seller.