Loans & EMI
EMI principal vs interest
Each EMI contains both interest and principal, but the mix usually shifts toward principal over time.
Reducing balance matters
Interest is charged on the outstanding balance, not the original loan amount every month. That is why an amortization schedule is useful when comparing repayment options.
Reading a schedule
For each instalment, check the EMI, interest amount, principal amount and closing balance. The EMI can remain fixed while those internal amounts change.
Prepayment
A part-prepayment reduces outstanding principal. Depending on lender terms, it may shorten tenure, lower EMI, or do a combination. Confirm the lender's treatment and charges.
This guide is for general education. Rules, lender terms, bank terms and individual circumstances can change the result.
Use the relevant calculator