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What is EMI in advance?

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Advance EMI is a plan that is normally prevalent in auto credits.

By this plan, you would pay the EMI towards the start of the month. Let us say you take a loan of INR 1 lac for an auto and your EMI is 10K for 10 months. By the ordinary EMI plan (additionally called EMI in arrears) 1 lac will be given to the auto merchant and EMI of 10K will begin from the end of the first month. By the advance EMI plan, the first month EMI would be deducted from the sum dispensed and the remaining will be paid to the merchant. So in the event that you take a credit of 1 lac, the first EMI will be deducted and only the balance will be paid to the merchant. The benefit of advance EMI is that, the whole first EMI sum is taken for the principal. So the resultant EMI would be lesser, since the entire EMI goes towards principal repayment. From the second EMI, it will be interest and principal as usual..

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