Explaining EMI & How You Can Handle Your Finances (2024)
EMI or Equated Monthly Installment is a monthly payment the borrower makes to repay the loan that was used to purchase a product or a service. EMIs are usually more popular with consumer loans such as personal loans, car loans, and home loans, and are determined on the basis of the total amount of the loan, the rate of interest, and the duration of the loan. EMIs are also inclusive of the principal amount as well as the accrued interest.
Why Are EMIs Important?
EMI are a very popular method of payment and an attractive alternative to a lump sum payment due to their flexible nature. With the payment of the EMI in installments, it becomes easier for the borrower to budget their finances and manage their cash-flow. Additionally, EMIs are more manageable compared to a lump sum payment where the sole payment of the entire amount can often affect your financial standing and can put a strain on your budget.
How Are EMIs Calculated?
EMIs can be calculated through the emi calculator provided by the lending institution. The emi calculator takes into account the principal amount, the rate of interest, and the duration of the loan to arrive at the monthly installment amount. The calculation formula is then used to determine the total amount of interest that is accumulated over the full term of the loan.
Gonoise Products on EMI
Gonoise is a popular brand that offers electronic and mobile accessories, with a focus on fast-paced technology that is relevant for the young and adventurous consumers to enhance their lifestyle. Gonoise Products are perceived to be trendy, and the brand provides a wide range of options for those seeking innovative and stylish gadgets.
The Bajaj Finserv Insta EMI Card is one such card that lets you convert your high-ticket purchases into small, manageable monthly payments. The Insta EMI Card comes with a pre-approved limit of Rs. 3 Lakh and offers you the flexibility to choose a repayment tenure of your convenience, ranging from 1 month to 60 months.
How to Manage Your Finances When Opting for EMIs?
The decision to opt for EMI must be made after thorough consideration of your finances and future liabilities. To ensure that you’re not under any financial stress during the loan repayments, you must maintain a reasonable budget that provides stability.
Here are a few budgeting tips that will help you to manage your finances during the EMI repayment:
- Calculate your budget and financial standing
Before finalizing a EMI plan, calculate your budget, monthly income, monthly expenses, and other financial liabilities. This calculation will help you to decide which EMI plan is best suited for you.
- Keep a Track of EMIs and Savings
Maintain a record of your EMI payments and savings by using a ledger or budget planner. With a tracker, you’ll be able to monitor your expenses and savings effectively and take necessary actions to keep them balanced.
- Reduce your Expenses
Cut down on expenses where possible. Review your budget and see the areas where you can make changes, like reducing your dining-out frequency or limiting your shopping.
- Build an Emergency Fund
Building an emergency fund is essential when managing your finances through EMIs. Aim to save at least 10% of your monthly income into a separate account that you can use in case of an emergency such as unforeseen circumstances such as an illness or a lost job.
- Prioritize your Debts
Pay off high-interest loans such as credit cards and personal loans before opting for a EMI. High-interest debt can quickly accumulate and affect your credit score, which in turn may impact the chances of getting future loans.
Conclusion
EMIs are a convenient and flexible payment option, especially for individuals who wish to buy products they cannot afford to pay for upfront. However, it is essential to remember that opting for EMI is a decision that should be made after due consideration of your budget and future liabilities. By monitoring your expenses, maintaining a financial tracker, reducing expenses, building an emergency fund, and prioritizing your debts, you can successfully manage your finances efficiently and with ease. Utilizing services like the Insta EMI Card you can avail yourself of the latest technology from Gonoise without any financial strain.
