When setting loan equated monthly instalments (EMIs), there are several key factors to consider. They may vary depending on the lender and the type of loan.
The principal amount of the loan is a crucial factor in determining the EMI. A higher loan amount will result in higher EMIs, and vice-versa.
The interest rate charged on the loan significantly affects the EMI calculation. A lower interest rate will result in lower EMIs, and vice-versa.
The duration of the loan, or the loan tenure, plays a vital role in determining the EMI.
The frequency at which you make loan repayments can impact the EMI. Monthly payments are the most common.
The borrower’s income and existing financial obligations should also be considered.
The type of loan and its specific terms may influence the EMI calculation.
If the loan agreement allows for prepayment or part-payment of the loan, it can affect the EMI.
Take into account any processing fees, administrative charges, or other costs associated with the loan. These may be added to the loan amount or included in the EMI calculation.