What is an Annual Reducing balance?
A. An Equated Monthly Installment (EMI) has 2 components, interest and principal. When the interest is calculated on annual rests, the principal reduces only at the end of the year. Therefore, you continue to pay interest on a portion of the principal that you have already actually paid back to the lending company.
An Equated Monthly Installment (EMI) has 2 components, interest and principal. When the interest is calculated on annual rests, the principal reduces only at the end of the year. Therefore, you continue to pay interest on a portion of the principal that you have already actually paid back to the lending company.
An Equated Monthly Installment (EMI) has 2 components: interest and principal. When the interest is calculated on annual rests, the principal reduces only at the end of the year. Therefore, you continue to pay interest on a portion of the principal that you have already actually paid back to the lending company.
In the case of annual reducing balance method, the principal gets reduced at the end of the year and the interest is calculated on the outstanding principal at the end of the year. Top Do I need to open an account with ICICI Bank for availing and/ or servicing the loan? We will encourage you to start a banking relationship with us so that we will be able to offer a host of other value added services, which are complementary to the loan. However, opening an account with us is not mandatory.
