Amortisation
Paying off a loan in instalments, where each EMI's split shifts from mostly interest to mostly repayment over time.
Amortisation is how a loan gets paid down, one EMI at a time. Each payment covers that month’s interest first and repays a bit of the loan with the rest. Because interest is charged on what you still owe, the early EMIs are mostly interest. See the split in how an EMI works.
Questions people ask
What is amortisation in a loan?
Amortisation is the way a loan is paid off through regular instalments. Each EMI covers that month's interest and repays some of the loan. Early on, interest takes most of it; later, most of it repays the loan.
What is an amortisation schedule?
It's a table showing, for every EMI, how much goes to interest, how much repays the loan, and what you still owe. Under RBI's Key Facts Statement rules, lenders must give it to you for retail loans sanctioned from 1 October 2024.
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