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EMI

              EMI stands for equated monthly installment. Every people desire to buy almost all the things, but the earnings and income level decides the purchasing power of the people. Some people can purchase a product by delivering cash along with the tips. Certain people might have a good amount of money in their bank and provide a check for that amount. Certain people can provide ATM card and swipe the amount. There are a certain people who used to buy certain luxury items in the form of the EMI. They will not be having the whole sum of money to purchase a particular product, but they still need the product and they have the power of paying certain amount of money each month until the overall amount is settled.

              This concept is similar to the monthly interest that is paid in the banks. Here we are just going to discuss about the advantages and disadvantages of this EMI system. It is a real boon for the person who earn a lesser salary. with this system they can afford to buy some luxury items. But, they might end up paying a lot higher amount of money than the original price of the product, due to the interest that is being involved and the time value of money. There should be a preplanned amount that should be kept aside each month to pay the bill of EMI. At the initial month, the payment of EMI might be satisfiable, as the months progress, we might feel the real heat that is involved while paying the EMI bills.

              Here, the time factor is deciding one. If we choose the lesser time interval, the amount paid as interest will reduce and vice versa. But, if the time interval is reduced, the amount of money paid every month will keep on increasing as the time interval reduces. If the amount to be paid is 10,000 and we decide to keep 1 year as time interval, there might be a payment to be made of Rs1000 per month for 12 months might sum up as Rs12,000 with interest of Rs2000. Incase if we take 24 months, we might pay Rs550 per month the total amount might sum up to Rs13,200, with Rs3,200 as interest. We must make right decisions in choosing the payment mode or else we might end up losing money or product or both.

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