EMI (Equated Monthly Installment) is a fixed monthly payment you make to your lender until the loan is fully repaid. Each EMI consists of both principal repayment and interest payment components. In the early years, a larger portion of your EMI goes towards interest. As the loan progresses, the principal component increases while the interest component decreases.

Amortization is the process of gradually paying off a loan through regular installments. An amortization schedule shows the breakdown of each payment between principal and interest, along with the remaining loan balance. Reviewing this schedule helps you understand how your payments are applied and plan for early repayment if possible.

Longer loan tenures result in lower monthly EMIs but significantly higher total interest payments. For example, a 20-year loan at 8.5% may have nearly equal principal and interest costs. Reducing the tenure to 15 years increases your EMI but can save you lakhs in interest payments.

Consider making partial prepayments whenever you have surplus funds, as these directly reduce the principal amount. Even one additional EMI payment per year can significantly reduce your loan tenure and total interest. Balance transfers to lower interest rate lenders can also provide substantial savings.