EMI Full Form is Equated Monthly Installment. EMI is an amount repaid by the borrower to the lender along with the agreed interest. EMI applies to various loans like home loan, gold loan, car loan, personal loan and more. The general calculation of EMI is derived by adding the principle amount and interest and dividing it by the number of months in the period the borrower agrees to pay the full amount. To simply put, EMI is the installment payment of the loan to the lender.
The benefit that a borrower enjoys through EMIs is that he or she exactly knows how much amount is to be paid each month, which makes budget planning much simpler. In an EMI calculation, the two variables comprise of principle and interest. During the initial years, the interest would be higher as the amount overdue is higher. And the interest eventually decreases as years pass by and the principle amount gradually reduces.
In today’s world, it is very difficult to live within your own means. However rich or poor a person may be, every individual needs to borrow money for various reasons at some juncture of life. The poor or middle class may borrow for their personal needs like home, vehicle, household gadgets etc. The rich and the affluent borrow money to expand their business or start new ventures, etc. The reasons may vary, but the bottom line is that money is borrowed from usually a bank or a private lender.
EMI Full Form – Additional Information
Once you borrow money for your needs, it has to be repaid to the lender – bank or individual. In order to facilitate easy repayment of the loan without burdening the borrower of heavy random give- outs every month, the system of EMI or Equated Monthly Installment was introduced.
EMI is the payment that a borrower does as his loan repayment amount to the lender on a fixed date every month. This composes of the interest as well as the part principal amount. When the tenure of the loan gets over, the entire amount is paid off through these EMIs and the end balance is nil. The EMI is calculated with three factors in consideration – the principal amount (borrowed amount), the annual rate of interest and the tenure of the loan.
Formula fort calculating EMI:
Where P stands for the Principal amount, r is the annual rate of interest divided by 12 and n denotes the number of monthly installments. The formula may seem complicated for a common man to comprehend, but in reality, it makes the life easier for him since he knows exactly what portion of his monthly earning is going to be deducted towards the loan. And this being a FIXED amount every month, it is simple while budgeting for the expenses.
How is EMI calculated?
As mentioned above, EMI is calculated using the formula and that the Principal loan amount, the annual rate of interest and period of the loan is taken into consideration. After calculating the EMI or equated monthly installment, the person is expected to pay the designated amount on a fixed date, usually by the first week of every month, after the 5th (taking into consideration that the salaried people get their pay by that day).
During the initial period, the EMIs are high on interest portion and lower on the principal amount. When the interest is almost covered and the loan comes towards the end of its tenure, then the Principal part is hiked and the interest portion goes down. Balancing these two aspects, finally, by the end of the tenure, the entire loan amount is recovered by the lender.
Unlike the variable payment plan where the borrower has the liberty to pay higher amount a particular month as per his choice, the EMIs are constant and cannot be changed. As the principal amount is paid up gradually, the balance automatically reduces and the interest is calculated for further years on the reduced principal. Longer the tenure, smaller the amount of EMI and conversely, shorter tenure incurs high EMI.
Advantages of EMI as against variable payment plan
- A variable payment plan may give the borrower freedom of choosing his payment amount. But in the long run, it creates problems for budgeting. Whereas EMI is a fixed amount that is to be paid monthly.
- Since you know the amount that is going to be deducted every month, there is no scope for speculation and your budget getting disturbed.
- Since the amount is variable, the borrower finds it difficult to advise the bank for electronic transfer after salary. In the case of EMI, the amount being constant, it is easy to advise the bank for a direct cut from account every month.
- Variable payment cannot be made through post dated cheques, as the borrower himself is not sure about his capacity to pay in a particular month. EMIs can easily be paid through PDCs (post dated cheque) since you know the exact amount to be given out each month.
- EMI option permits the borrower to have a clear picture of his monthly budget. On the other hand, a variable payment plan is full of uncertainty.
When does one need to pay EMI?
Whenever you borrow money and have to refund it, the EMIs start. The lender can be a bank or an individual money lender, but the criteria remain the same. Every borrower has to pay a specific amount every month in the form of EMI and the payment is made on a fixed date. So whether you give the electronic transfer option or post-dated cheques, the amount needs to be cleared on that specified date.
This is a world of borrowing and repaying. You need to buy something for the house, need funds for your vacation, have a dream house or car in mind but cannot purchase it cash down, the reasons may be endless but the need is the same – money. In the case of businessmen, expansion of business or entering into new avenues needs funding in a big way and thus, there is a need to borrow.
Under any circumstances, the EMI clock starts from the month after your borrowing. For this, you have to fix the tenure of the loan with the lender and agree to the rate of interest per annum. After these issues are settled, then it is easy to convey to you the EMI amount depending on the sum borrowed.
Knowing more about handling EMI
Equated Monthly Installment has made life simpler for the masses. It is particularly useful for salaried persons as they get loan very easily on the basis of their employment and the installment gets auto deducted from borrower’s account after payday. However, if you happen to default on an EMI, you are levied penalty or recovery agents are sent to collect the dues. Before borrowing a sum, the borrower should judge his repayment capacity and then decide on the tenure of repayment.
Longer the tenure, easier it is in his pocket every month as the EMI amount reduces considerably. Currently, the trend is to lure a buyer by giving him easy EMI options and interest-free EMIs. So under such cases, the shopkeepers have a tie-up with certain banks that fund the consumer to purchase goods. According to his credit standing, the future payments are deducted from his salary account. Whatever be the case, when you need to borrow money take only the required amount and pay the installments on time to prevent the penalty.
EMI Full Form: Electro Magnetic Interference
Full Form of EMI refers to Electro Magnetic Interference. Also known as radio-frequency interference, Electromagnetic Interference is a disturbance or disruption of the performance of an electronic device in the presence of a radio frequency spectrum. The disturbance that is generated from the external source affects the electrical circuit through electromagnetic induction, conduction, or electrostatic coupling. The interference might completely stop the function of the circuit or just reduce the performance level of the circuit. Intentionally, it is used in electronic warfare to create radio jamming.
EMI can be of two types – Broadband EMI and Narrowband EMI. Another method of differentiating the kinds of EMI is by the duration of interference. There is continuous interference EMI and Impulse noise EMI, which is manmade. Most often, Integrated circuits happen to be the source of EMI, if they couple their energy to large objects like circuit board planes, heat sinks, or cables, to significantly radiate.
Full Form of EMI: European Monetary Institute
EMI Full Form stands for European Monetary Institute. It was a temporary institution, which was established at the beginning of stage two of EMU or Economic and Monetary Union. It was established on 1 January 1994. European Monetary Institute was the predecessor of the current European Central Bank or ECB. EMI operated between 1994 and 1997. The primary objective of EMI was to oversee the creation of monetary union – second stage. It took over from the former EMCF or European Monetary Cooperation Fund.
The prime objectives of EMI were to make preparations needed to establish ESCB or European System of Central Banks, and to strengthen monetary policy coordination and central bank cooperation. It had taken the view that the market participants must determine their own means and ways to adapt to a single currency. It has contributed to areas like; the definition of changeover; legal framework for Euro introduction; the infrastructure of the payment system; and adoption of market standards.
EMI Full Form: Engineering Ministries International
Full Form of EMI refers to Engineering Ministries International. It is a Christian development, non-profit organization, which is made of engineers, architects, and various design professionals who can offer their skills to help families and children all over the world to come out of poverty and give hope for a bright future.
The mission is to mobilize the skills of professionals in order to minister the less fortunate in the developing nations. It is said to proclaim Gospel of Jesus, through these deeds. The main objective is to enrich lives of those who receive and those who give. EMI involves in various service areas such as; technology/computers, disaster relief, engineering, architecture, construction, international missions, and more.
Full Form of EMI: External Machine Interface
EMI Full Form stands for External Machine Interface. It is an extension to the UCP or Universal Computer Protocol and is basically used to connect SMSC or Short Message Service Centers for all types of mobile telephones. External Machine Interface was developed by the CMG Wireless Data Solutions, which is currently a part of Logical CMB – the SMSC market lead.
Every byte of the message is encoded into two hexadecimal characters with the help of encoding, which is different from ASCII. EMI provides access to functions of SMSC such as submission of short messages; reception of short messages; and reception of notification. Setting up of connection between SMSC and SMT depends on the career, which is used. Once a connection is established, EMI operations can be applied.
EMI Full Form: Experimental Musical Instruments
Full Form of EMI refers to Experimental Musical Instruments. Otherwise called as Custom-made Instruments, the experimental musical instruments are those that extend or modify the existing musical instruments or created as a new class of experiment. At times, these modifications are as simple as just inserting metal objects between the strings of a piano to produce a different type called ‘prepared piano’.
Some of the EMIs are made from household things like bathtub plus or mute, etc. There are also instruments that are created out of spare electronic parts or by blending electric components with acoustic instruments. The concept of Experimental Musical Instrument started in 1985, as a part of the quarterly journal devoted to the unconventional instruments. Slowly, over the past years, people were increasingly involved in utilizing their creativity to produce a wide range of materials related to musical instruments.
Full Form of EMI: English as the Medium of Instruction
EMI Full Form stands for English as the Medium of Instruction. There is a major shift around the world, which is happening in using English as the medium of instruction in educational institutions and other areas. Most of the academic subjects like mathematics, science, medicine, geography, etc. are taught in English. The British Council is currently working with the research center of OUDE or Oxford University Department of Education to discover the consequences of introducing EMI in learning, teaching, assessing, and professional development.
Some of the findings of the research have revealed that – EMI is growing in both private and public education across the globe in every stage of education. Also, there is more application of EMI in private education than in public in all the stages like primary, secondary, and tertiary. EMI is considered to be the passport to a global world.