The exact percentage allocated towards payment of the principal depends on the interest rate. The interest component of the EMI would be larger during the initial months and gradually reduce with each payment. The sum of principal amount and interest is divided by the tenure, i.e., number of months, in which the loan has to be repaid. It consists of the interest on loan as well as part of the principal amount to be repaid. Equated Monthly Installment - EMI for short - is the amount payable every month to the bank or any other financial institution until the loan amount is fully paid off.
