Published on: August 13, 2024
Imagine finding the perfect smartphone – a sleek design with top-notch features and everything you’ve been looking for. But the only problem? Its price is a bit expensive. EMI, which has now become a familiar concept, allows you to break the cost into manageable monthly payments. For example, instead of paying INR 50,000 in one lump sum, you can pay INR 5,000 per month over a period of ten months. This helps make larger purchases easier, but these installments usually come with interest fees that add to the overall cost.
Now, imagine getting the same flexibility without the additional benefits, just the original price of the product, broken down into easy installments. This is what no cost EMIs are for.
But how do these offers work, and are they really free? Here we’ve discussed the concept of no-cost EMIs to help you understand what they offer and how they could change the way you approach your next big purchase.
What is a no-cost monthly installment?
EMI, or Equated Monthly Installment, is a convenient payment option that allows you to spread the cost of the purchase over a specified period. By making equal monthly payments, you can manage your money more easily and avoid paying a large amount at once.
Although the interest rate on EMI payments may vary depending on the lender, the no-cost EMI option allows you to pay the EMI without any interest. This option is often available through many banks, credit card providers, and retailers. However, it is important to read the fine print, as some additional costs may be built into the price of the product or involve a small processing fee.
How does No Cost EMI work?
Calculating your no-cost monthly installment is very simple. All you have to do is divide the total price of your purchase by the length of the repayment period.
For example, you buy a laptop for INR 60,000, and the seller offers a no-cost EMI option for 12 months.
With No Cost EMIs, you will pay just INR 60,000 divided into 12 equal monthly installments of INR 5,000, without any additional interest.
Benefits without cost EMI
A no-cost monthly installment offers multiple benefits by breaking up your purchases into manageable installments, so you don’t have to pay the full amount up front. Here are some of its benefits:
- Provides flexibility while shopping: It helps you make multiple purchases without the stress of paying the entire amount at once. Since your payments are split into easy monthly installments, it makes your shopping fit on your budget.
- Helps maintain a good credit score: By paying your no-cost EMIs on time, you can improve your credit score.
- Easy access to loans: No cost EMI is not only a faster and easier way to get a loan but also provides the convenience of borrowing money to people with low credit score.
- Interest-free borrowing: There are no explicit interest payments required for the amount borrowed.
- Low processing fees: Processing and documentation fees are usually nominal.
- Wide availability: No-cost EMIs are offered by many banks, retailers and lenders, ensuring widespread accessibility.
What should you consider when choosing no-cost EMIs?
Here are some things you should consider when choosing a no-cost monthly installment:
1. Processing fees:
Although a no-cost monthly installment is a great way to avoid paying a large amount up front, it’s important to note that some financial institutions may charge a processing fee. These fees may not always be clearly stated in the offer.
2. Risk of debt trap
With the ease of easy finance, many people are now vulnerable to compulsive spending. You should learn about the factors that may lead you into a debt trap. A simple rule you can follow is to revisit your finances if your Total EMI exceeds 35% of your income.
3. Timely payment
Making your EMI payments on time is important to maintain a good credit score. Missing a payment can negatively impact your credit rating, which could affect your chances of getting a new loan or other form of credit in the future. Additionally, late payments may result in penalty fees, increasing your financial burden.
conclusion
No Cost EMI has changed the concept of paying for large purchases, providing a flexible and accessible financing option. To make the most of your no-cost EMI, it’s important to thoroughly research the terms, manage repayments responsibly, and ensure the plan aligns with your financial goals.
Another alternative to managing huge expenses is choice Personal loans. These loans come with higher loan amounts, competitive interest rates, and flexible repayment tenure.
Frequently asked questions
What are the eligibility criteria to benefit from the monthly installment at no cost?
To be eligible for the no-cost EMI, you must have a good credit score and an existing credit card. However, some retailers and financial institutions are also offering no-cost EMI options through debit cards or in partnership with non-banking financial companies (NBFCs).
Are there any hidden fees in the no-cost monthly installment?
Although there is no interest charged, some providers may include a processing fee or adjust the original price by removing discounts. You should always check the final amount due before opting for a no-cost monthly installment.
Do I need a credit card to avail the EMIs at no cost?
While no-cost EMI is often associated with credit cards, many platforms now offer this option through debit cards, e-wallets and non-bank money, making it accessible even without a credit card.
What happens if the product is returned or exchanged?
If you return or exchange a product purchased on a no-cost EMI scheme, the retailer will usually cancel the EMI plan and refund any amount paid, although the process may vary depending on the terms and conditions.
What is the difference between the no-cost monthly installment and the no-cost monthly installment?
No-cost EMIs and no-cost EMIs are often used interchangeably, and both refer to equal monthly installments without additional interest charges. However, always check for any hidden fees or terms.