Loans
EMI
Equated Monthly Instalment is the fixed monthly payment that repays a loan over its tenure.
What it means in practice
EMI depends on principal, interest rate and tenure. Extending tenure lowers the EMI but raises total interest paid; a shorter tenure does the opposite.
Related terms
Amortization
The process of repaying a loan through fixed instalments that cover both interest and principal.
Reducing Balance Rate
Interest charged only on the outstanding principal, which falls with every repayment.
FOIR
Fixed Obligation to Income Ratio is the share of monthly income already committed to debt repayment.