Quick Answer: What Is Reducing EMI?

What happens if EMI is missed?

For the one month that the EMI is unpaid, you could be charged a late payment penalty as a % of your EMI amount.

For example, if your EMI amount is 38,355 and the bank levies a charge of 2% for your late payment, you will pay an extra Rs.

767 as penalty..

Can you go to jail for not paying a bank loan in India?

Loan defaulter will not go to jail: Defaulting on loan is a civil dispute. Criminal charges cannot be put on a person for loan default. It means, police just cannot make arrests. Hence, a genuine person, unable to payback the EMI’s, must not become hopeless.

How can I reduce my EMI?

To reduce your home loan EMI, the first thing you should do is to choose a lender which offers home loan at a lower rate of interest.Compare rates online. … Opt for longer repayment tenure on your loan. … Make a bigger down payment. … Refinance the loan by changing your lender. … Negotiate the service terms with existing lender.More items…•

What is difference between reducing and flat interest rate?

Difference Between Flat and Reducing Interest Rate Under flat lending rate, interest is calculated on the total principal amount sanctioned whereas interest accrual under diminishing rate is based on the outstanding loan amount. Fixed-rate calculations result in a higher effective interest rate equivalence.

What happens if you dont pay EMI?

Missing one EMI payment doesn’t make you a defaulter. When you fail to pay several EMIs on time, your lender reports you as a defaulter. Some lenders may offer a grace period after the payment date during which you can make the payment; however, a late fee will be charged, but you won’t earn the title of a defaulted.

Why EMI is not deducted?

Q: My EMI is due soon. Will the payment not be deducted from my account? A: The RBI has only allowed banks to allow a moratorium. … This means that unless you have specific approval from your bank, your EMIs will still be deducted from your account.

Is it better to reduce EMI or tenure?

But it is best to reduce the tenure of the loan, provided you can afford it. “It is better to reduce tenure if you are comfortable paying the same or a marginally higher EMI. … For example, if you can pay an EMI of Rs 52,429, you can lower the tenure of your loan by two years and save Rs 8.58 lakh as interest cost.

What is reducing interest?

A reducing rate (also known as a reducing balance rate), as the term suggests, is an interest rate that is calculated every month on the outstanding loan amount. Each time you make a repayment on the loan, the interest rate will decrease.

Is EMI postponed for 3 months?

Latest Update 22 May 2020: The Reserve Bank of India (RBI) announced an extension of EMI moratorium by three months, i.e., June, July and August, 2020. The earlier deadline of three-month EMI moratorium was ending on May 31, 2020.