EMI Calculator

Pre EMI vs Full EMI

EMI (Equated Monthly Installment)

EMI or Equated Monthly Installments is a fixed amount paid by the borrower to the lender every month till the debt owed is cleared. Equated Monthly Installment is constituted by both the interest to be paid and the principal amount. The EMI will stay constants, but the components can vary. EMIs are usually taken for repayment of loans or a purchased item. Any kind of loan including home loan, car loan and other loans can be repaid through EMIs. The EMI to be paid is directly proportional to the loan amount and inversely proportional to the tenure of the payment.

One can calculate the payable EMI by using an EMI Calculator by entering details such as the loan amount, tenure period and interest rate. There are different modes of EMI repayment that one can opt for depending on their financial situation.

Different modes of EMI repayment- Pre EMI and Full EMI

●       Pre EMI: Consider a home loan that you have taken which you are planning to pay through EMIs. In the Pre EMI payment option, the loan amount is partial disbursed to the builder which means that you have to just make the payment for the interest on the disbursed loan amount until the construction of the house is complete. The borrower will start making EMI payments only once they get the possession of the house. In this option, the loan repayment is calculated on the basis of actual loan disbursement.

●       Full EMI: In the Full EMI repayment option, the borrower will start by paying up the principal amount from the very first EMI repayment. The EMI amount will be higher in this option when compared to the amount payable in the Pre EMI option. But the borrower has an advantage here as they would have paid a considerable principal amount by the time they get the possession of the house. This reduces the loan tenure too.

Pre EMI vs Full EMI! Which is the better option?

Both of the EMI repayment options have its own pros and cons. With Pre EMI repayment method, the borrower can face a lot of trouble if the project gets delayed as the tenure for the payment of the interest on the loan increases. Consider a situation where it takes two years for the completion of a project with a loan tenure of 10 years. In this case the borrower will be making interest payments for 12 years as opposed to 10. With the Full EMI payment option, the borrower would have already repaid a major amount of the principal amount by the time the project is finished thus taking the burden off of the borrower and granting them a peace of mind.

Considering all the factors, Full EMI repayment option seems like the better choice except in a few special conditions where the borrower intends to sell the property as soon as it is completed. The borrower might also face a problem in getting back the principal amount paid in the case the project gets cancelled. In these cases, it makes more sense to choose the Pre EMI payment option.