Pre-EMI

POSTED BY Kunal D ON May 6, 2013 4:47 pm COMMENTS (8)

Hi,
I have recently availed a Site/Plot Loan from Axis Bank.

I have been charged a PRE-EMI amount that got deducted before the actual EMI started.

I have also been provided the EMI breakup for Principal and Interest for the entire period[120 months].

The Bank offcials have told me that the Pre-EMI payment will account towards the Interest component.

Next, I used the EMI calculator found at JagoInvestor.com and other sites and find there is a difference of 4K in the interest charged by Axis and also they have not accounted the PRE-EMI payment under the interest. So I am actually supposed to pay an extra of Pre-Emi and 4K!
Note: I used the current ROI in the calculator for the entire loan period.

Can you tell me where does the Pre-EMI payment usually get accounted in a Home Loan ? Interest or Principal part?

Thanks,
Kunal

8 replies on this article “Pre-EMI”

  1. Dear Ashish, Thanks for the clear explanation.

    Thanks

    Ashal

  2. Dear Kunal, Pre EMI is the interest to be charged only in case where there is a moratorium in EMI payment or some in between delay in full loan disbursal & due to which full EMI has not been started. As the PRE EMI word itself it’s an EMI before start of the regular EMI. 🙂

    Thanks

    Ashal

  3. Kunal D says:

    Hi Ashal,
    So Pre-EMI is the additonal interest that I will have to pay in addition to the actual interest computed in the EMI’s ?

    Will this Pre-EMI amount get added to the actual interest component under the EMI?

    I did search and did not get any clarity on this specific topic and hence asking to clear doubts.

    Regards,
    Kunal

    1. Ashish says:

      Dear Kunal,

      As dear Ashal has sated, Pre-EMI is the interest that one has to pay if there is a difference between full loan disbursement and the Actual EMI. For example:

      A loan is disbursed on 22nd April. The actual EMI will start from May (1st EMI will be taken on 5th June. This is EMI payable for the period of 1st to 31st May). But what about the time from 22nd April to 30th April? So bank will charge only simple interest on loan amount disbursed for this in-between period of 22nd April – 30th April.

      In my case I had taken a disbursement of about 30L on 27th Feb and bank charged me simple interest on 30L for 27th and 28th Feb. From 1st of March the EMI started which got deducted on 5th April as EMI’s are not payable in advance.

      Hope I am able to clarify.

      Ashish

  4. Dear Kunal, the Pre EMI charged from you is the interest for the period from loan disbursed to the end of month before start of actual EMI from next month. For the 4000 Rs. extra amount, please check with Axis bank, from where it is coming into calculation.

    Thanks

    Ashal

    1. Kunal D says:

      Hi Ashal,
      Thanks for clarification.

      I too predicted the same – but the Axis Bank officials told me that the Pre-EMI will be added to the Interest component and hence I feel either they are not aware of the computations or something is missing.

      Has anybody else come across such scenarios from any other banks?

      I will get a clarification from Axis Bank again.

      Regards,
      Kunal

  5. Kunal D says:

    Hi Ashal,

    As per JagoInvestor EMI Calculator:
    ——————————
    Loan amount – 2913453
    EMI per Month : 39313
    Total amount Paid : 4717560
    Total Interest amount : 1804107 (38%)
    Total Principle amount : 2913453 (62%)
    ——————————

    As per Axis Bank:

    ——————————
    Loan amount – 2913453
    EMI per Month : 39313
    Total amount Paid : 4721526
    Total Interest amount : 1808073
    Total Principle amount : 2913453

    In addition to this I am asked to pay a Pre-EMI of 19277/-
    ——————————

    So in all an excess of 23,000/- is being charged.

    Can you kindly clarify this?

    Regards,
    Kunal

  6. Dear Kunal, can you quote the exact details of your loan amortization schedule? I think you are misunderstanding somewhere but I want to confirm it from you.

    Thanks

    Ashal

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