EMI refers to equated monthly installment. It is a fixed amount which you pay every month towards your loan. It comprises of both, principal repayment and interest payment.
EMI payments start from the month following the month in which the full disbursement has been made.
The EMI should be paid every month through post-dated cheques (PDCs) or direct deductions from your salary. If you are opting for PDCs, you will have to provide 36 upfront. These PDCs are to be dated for the 1st of every month. However, most financial institutions do have flexible rules for dating of the cheques, keeping in mind the delay in processing of salaries. For definitive details, check the rules and regulations of the financial institution you are associating with.
In the case of a bounced cheque or delayed payment, charges and outstanding dues will be charged as per the prevailing company policy. You can replace old PDCs with new ones within 5 - 7 working days.
In the case of part disbursement of the loan, monthly interest is payable only on the disbursed amount. This interest is called pre-EMI interest (PEMI) and is payable monthly till the final disbursement is made, after which the EMIs would commence.
The first PEMI is payable by cheque by the end of the month in which the disbursement is made. Each subsequent PEMI is payable at the end of every month till the commencement of EMI.
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