What are equated monthly installments (EMI)?

An Equated Monthly Installment (EMI) is a fixed amount of money paid by a borrower to a lender at a specified date each month. It is used to repay loans over a set tenure, combining both the principal and interest components into a single, manageable payment. The EMI amount is calculated based on the loan amount, interest rate, and repayment period, ensuring consistent payments throughout the loan tenure. This approach helps borrowers plan their finances effectively while gradually reducing their debt.