EMI Full form is An equated monthly instalment.

## EMI Full form: EMI- Equated Monthly Installment

People have many purchases to make in little time. They have to buy smartphones, TV, fridge, laptop, furniture items of home and many others at the same time. How do they arrange for all the money at one go? As it is not possible, hence the concept of EMI, the equated monthly installment, came into being.

## How can EMI be helpful?

EMI divides the expenses that a person is required to make, or wishes to make, into equal parts over a few months. For instance, the price of a laptop may be divided into 24 equal parts, and the purchaser can pay the money in equal bits over two years. This helps people to make big purchases without having to wait for accumulating money for that purpose.

However, the equal bit that one has to bear will also include the interest. Thus, not only the selling price but the extra bit of interest also will be included. This increases the total cost that one has to bear for a purchase, but most of the people with limited income do not mind.

They have the advantage that they can enjoy a new stuff without having to wait, and the expenditure is getting divided into small pieces that are bearable. In return to this advantage, the interest is being paid. Firstly, the advantage of an instant purchase is there. Secondly, the money to be dished out, including the interest, is not a huge pressure when divided over time.

## Can thew purchaser choose the time of EMI?

Is it possible for the purchaser to choose the time duration over which the EMI has to be paid? Yes, in most cases, it can be chosen by the purchaser. There are lots of EMI starting for 3 months, 6 months, 12, 18 or 24 months. The higher duration for which an EMI is chosen calls for a higher rate of interest. Thus, if a person chooses the option for 3 months, s/he has to dish out an EMI that is lower than if the same EMI is chosen for 24 months.

When a purchase is made as an EMI, it becomes similar to borrowing money from a bank. The EMI’s are provided by the banks and not the sellers or manufacturers. So, for a purchase, the bank comes in as the third party in case the EMI option is chonk erans fro tsen. The bank gives the money away to the manufacturer or seller right away, and makes it a credit in the name of the purchaser. When the purchaser pays the interest, it is because s/he had a borrowing from the bank for some time. It becomes synonymous to a bank loan. The bank provides money to the seller, and that becomes a loan for the purchaser. The bank earns from the interest it puts on the purchaser, and the overall economy grows as a result of this.

## How can EMI contribute to economy?

Running the business is extremely important for the growth of the economy. An economy starts to fall down when the flow of money is hampered. If purchases decline for a longer period of time, then generally the economy starts to suffer. It may take a nosedive if no check is done or no corrective action taken.

EMI’s keep the business running by making the money flow even when a person does not have it. If an individual wishes to or is in need of a laptop today. S/he can buy it through EMI in order to make it convenient. Thus, the money flow continues and sellers and manufacturers are benefitted even if people really don’t have the money at hand.

Without the EMI facility, the economy will grow at a much slower pace. People have to wait for the money to come. This will test the patience of the aspiring individuals. In order to accumulate more money in lesser time, people may resort to wrong ways of doing things, and the social peace may get hampered.

The availability of EMI calms people down, bring them happiness and keeps the money rolling. The EMI’s also make individuals work harder in their professions in order to gather the money required over time, helping in a way to a sincere workforce.

## How do banks gain from EMI?

EMI Full form : EMI’s help the banks earn their money. More the EMI’s generated, more is the income that the banks earn. The credit card business, which also forms a large part of the banking sector, ruins to a great extent based on the EMI’s. Most of major credit card companies offer up to 6 EMI’s on a single credit card to an individual. The interest rates are moderate to high, but then the facility of buying something important or precious without having the affordability at the moment of buying is also there. In case of emergency situations, these EMI’s are the options that a person falls back upon.

## How EMI through credit card be more helpful?

The EMI’s of credit cards have an advantage which is that these EMI’s can include any purchase. For instance, if one has to buy an air ticket urgently, the option for EMI may be available only through a credit card. Similarly, for an emergency medical need, one can pay a hospital through a credit card and then convert the expenses into EMI’s. Not all items available for purchase offer EMI. But through credit cards, anything that is bought can be covered under EMI.

EMI is therefore an option very much used by the salaried individuals. Especially for the middle class, it is a very good option for buying things important in life, like a house or a car. Frankly speaking, it is often impractical to think that one will buy a house once the whole money is accumulated.

The natural inflation in economy does not allow an individual to do so. For salaried people, they generally have a clear idea about their projected earnings over a short period of time. Thus, they can plan well and go for availing the EMI option for the various purchases of their needs.