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sudheer kumar

sudheer kumar (Querist)
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03 April 2013 WHAT IS MEANT BY PRE-EMI AND DIFFERENCE BETWEEN EMI AND PRE-EMI?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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03 April 2013 EMI means Equal Monthly instalment i.e paying eual amount every year. It is fixed at the time of term loans based on the loan amount, interest rate applicable and period of the loan.

There is gap between loan sanctioned date and EMI starting date such gap period called as Holiday period i.e EMI need not to be pay on such Holiday period and thus your EMI paying term shall be start from the completion of holiday period but interest shall be charged and debited to your loan account during the holiday period also. Thus interest charged in the holiday period is called PRE-EMI interest. I.e PRE-EMI means "priror to starting of EMI payment)

For example assume loan sanctioned on 1-4-2013 and you have to repay the amount of loan in equal instalments from 1-10-2013 i.e you first instalment of repayment will be due on 1-10-2013. Repaying of amount of loan along with interest in equal amount as instalment basis is called EMI(Equal monthly Instalment) and the period from 1-4-2013 to 30-09-2013 shall be called as PRE-EMI period or holiday period.

In one word the period from the date of sanction of loan till the date of due of first instalment of loan re-payment is called PRE-EMI period and interest charged in that period shall be called as PRE-EMI interest. EMI means Equal monthly instalment.

The above explanation given based on the general terms in according to the term loans giving by banks or financial institutions etc...

In case you asked the above doubt for the purpose of section 24(b) of Income act,1961 then total meaning will be changed. If you want the explanation regarding section 24(b) then please reply me.

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