A loan is a particular sum of money which is borrowed from banks or other credit organizations to satisfy a number of both unforeseen and expected needs. Credit means borrowing of money from a lender, where it is repaid in future with an agreed period of time. In regards to repayments, both the principal amount as wells as the interest forms part of the repayment plan. Loans, on this basis, can be of secured loans, unsecured loans, personal loans, and commercial loans.
Lenders grant funds as single sums or as credit facilities, up to certain amounts which can be drawn evenly or irregularly. They evaluate the credit score of a borrower, their income, as well as the existing amount of loans before qualifying to be granted the loan. Furthermore, those lenders with sophisticated contracts may operate a premium of higher interest rates to risky borrowers.
What is EMI?
EMI stands for equated monthly instalment whereby it is a fixed amount predesigned to ensure systematic tenure of removing the loan amount in the agreed period. Several factors shape EMI payments:
Several factors shape EMI payments:
Principal borrowed: Is the total that may be borrowed as a loan without putting down any money or asset.
Loan interest rate: Affect EMI in direct manner indicating the cost of borrowing.
Tenure: Loan tenor affects EMI, the longer the loan tenure the lower the EMI but higher interest cost over the whole period.
