Finance Dictionary
EMI
Equated Monthly Instalment — the fixed amount repaid each month on a loan, covering both interest and principal. Early instalments are mostly interest; later ones are mostly principal, even though the total stays the same.
Formula
EMI = P × r × (1+r)^n / [(1+r)^n − 1], where r is the monthly rate and n the number of months
Example
A ₹30 lakh home loan at 9% over 20 years carries an EMI of roughly ₹27,000, of which about ₹22,500 is interest in the first month.
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