![]() ![]() ![]() However, during the tenure of the loan, subsequent EMIs contribute more towards repayment of principal amount as compared to previous EMIs. It is a well-known fact that the initial EMIs contribute more towards payment of interest due as compared to the principal amount. This means that pattern of reduction of principal amount through payment of each EMI will typically follow similar trend across all financial institutions. Thus, for a given loan amount, tenure and interest rate, the EMI calculated and the amortisation schedule offered by banks and Non-Banking Financial Companies (NBFCs) will typically be similar. This also means that with the payment of each EMI, the pattern of reduction of the principal due generally follows a similar trend across all financial institutions.īanks and financial institutions, in general, calculate EMI through a common mathematical formula. So, the EMI calculated and the amortisation schedule given by different banks and NBFCs will typically be similar for a given loan amount, tenure and interest rate. ![]() But the later EMIs contribute more towards the repayment of the principal.īanks and financial institutions generally calculate EMIs using a common mathematical formula. The first few EMIs contribute more towards the payment of interest and less towards repayment of principal. The proportion of each EMI used for repayment of the principal and the interest changes over time. Each EMI repays a part of the principal (or the amount borrowed) and the interest due on that principal outstanding. ![]()
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