Do we pay extra on no cost EMI?
No cost EMI is a popular payment option offered by many retailers in India, allowing customers to purchase products and services in monthly installments without incurring any additional costs. However, the question remains – do we pay extra on no cost EMI? In this article, we will explore this topic in-depth and answer this question in detail.
Firstly, it’s important to understand what no cost EMI means. When you opt for no cost EMI, you are essentially paying for a product or service in installments without paying any additional interest charges or processing fees. This means that the total amount you pay is the same as the price of the product, divided into equal monthly installments. So, if you purchase a product worth Rs. 10,000 and opt for a 6-month no-cost EMI plan, you will pay Rs. 1,667 per month for six months, which adds up to Rs. 10,000 in total.
Now, the key point to note here is that while you don’t pay any interest charges or processing fees on the no-cost EMI option, the product price may still be higher than the cash price. This means that if you were to pay for the product in cash upfront, you may get a discount or a lower price than if you were to opt for the no-cost EMI option. In other words, you may end up paying extra for the convenience of paying in installments without any interest charges.
How to calculate any EMI?
For example, let’s say you are interested in purchasing a smartphone that costs Rs. 20,000. The retailer offers a no-cost EMI option for 6 months at Rs. 3,333 per month. However, if you were to pay in cash upfront, the retailer may offer you a discount of 5%, bringing the price down to Rs. 19,000. In this case, while you don’t pay any additional interest charges or processing fees on the no-cost EMI option, you end up paying Rs. 1,000 extra for the convenience of paying in installments.
It’s also worth noting that not all retailers offer no-cost EMI options on all products. Some products may have a minimum purchase amount or may not be eligible for the no-cost EMI option. Additionally, the no-cost EMI option may only be available on certain credit and debit cards, and may have certain terms and conditions associated with it. It’s important to read the terms and conditions carefully before opting for the no-cost EMI option to ensure that you understand the costs involved.
Another important factor to consider when opting for the no-cost EMI option is the impact it may have on your credit score. When you opt for the no-cost EMI option, you are essentially taking a loan to pay for the product in installments. This means that your credit score may be impacted if you miss a payment or are unable to pay the installments on time. It’s important to ensure that you have the financial capacity to pay the installments before opting for the no-cost EMI option.
Conclusion
In conclusion, while the no-cost EMI option does not charge any additional interest charges or processing fees, you may end up paying extra for the product if the cash price is lower than the no-cost EMI price. It’s important to read the terms and conditions carefully and ensure that you have the financial capacity to pay the installments before opting for the no-cost EMI option. Additionally, you should consider the impact the no-cost EMI option may have on your credit score before making a decision. Overall, the no-cost EMI option can be a convenient way to pay for big-ticket purchases in installments, but it’s important to make an informed decision based on the total cost involved.
