Choosing Amount, Rate, and Tenure
The three variables that determine your EMI are principal (loan amount), annual interest rate, and tenure expressed in months. Increasing principal raises both EMI and total interest outgo. Increasing tenure reduces EMI but increases total interest. Increasing the interest rate raises both EMI and total cost. The key is to identify a combination that fits your monthly budget without inflating long‑term costs excessively. Try a few scenarios: keep the amount constant and vary the tenure; then keep the tenure constant and vary the rate. You’ll see how sensitive your monthly outflow is to each input and where you can compromise.
While comparing offers, focus on all‑in cost. Some lenders advertise low rates but add fees like processing charges, documentation, legal, valuation, or insurance bundles. Convert these into an equivalent annualized cost if possible (APR) so you have a fair apples‑to‑apples comparison. If you expect rate changes, explore whether the product is fixed or floating, and understand how resets work. A small rate change can meaningfully alter EMI on larger principal or longer tenures. If prepayment is allowed without penalty, planning occasional prepayments early in the schedule can substantially reduce interest, as interest accrues on a larger outstanding balance in the initial months.
Finally, think about liquidity. Don’t stretch your budget so thin that routine expenses or emergencies become stressful. Maintain a buffer and prioritize high‑interest debt repayments first. Once you submit these details, the next page will compute the EMI and summarize your total payable and interest outgo.