The EMI at no cost is one of the most popular fine options for the lasting goods of high -price consumers, such as devices and appliances. It allows consumers to differ high -value purchases approximately several monthly installments without any additional interest charge. Popular electronic compensators such as Amazon, Flipkart, Ajio, Tatacliq and more sacrifice the installation of EMI at no cost in collaboration with the main card issuers. But is it really as beneficial as it seems? Let’s take a closer look at the benefits of the EMI at no cost and some key factors to consider when opting for it.
How does it work?
Unlike regular emi transactions that come with additional interest positions, IMI free of charge allows you to divide the cost of a product into monthly installments without any interest. The interest is still taken into account in the EMI, but the merchants or lenders compensate it by providing an equivalent discount.
Here is an example. Suppose you are buying a refrigerator worth ₹ 60000 using EMI of credit cards for a six -month ture. If the card issuer charges an interest rate or 16% in EMI, the total interest charged will be ₹ 9,600, together with 18% of GST in the interest component, by value of ₹ 1,728. In a regular Emi plan, you must pay the product price and the amount of interest together with GST, which are your total jump would be ₹ 71.328.
However, in the case of EMI at no cost, the amount of interest is adjusted as a discount, which allows you to obtain the product at its real price. In the previous example, the merchant would offer a discount in advance of ₹ 9,600, which will cover its cost of interest, based on the reduction of its Emount to ₹ 10000 per month. This means that it would pay only the real price of the product, that is, 60,000.
However, a key factor to consider is that, although the merchant provides a discount in advance to compensate for the cost of interest, the GST on the amount of interest is still paid by the card holder. In the previous example, GST of ₹ 1,728 will be charged to your credit card. Keep in mind that it will also be applicable in the processing rate and other applicable positions.
While I emi free can be a reasonable option for the purchase of high value, here are some key factors to choose this option.
Choose wise possession
Unlike regular issues, I emi free of charge generally have shorter reimbursement holdings, which generally range from 3 to 9 months. Shorter possession would increase the amount of EMI, therefore, it is important to strategically choose tenure. You must ensure that EMI’s amount adapts to your monthly budget and can comfortably pay your fees on time without financial charge. Read the small print
While the term “without cost” sounds attractive, many lenders charge a processing rate in EMI at no cost, which increases the general cost of the product. Allle that obtains the product at its real price with an emi at no cost, the additional charges can increase the cost. Similarly, some lenders slapped the payment for payment for payment. So, if he anticipates that he would have funds to pay the amount before, he must verify the associated terms. In addition, the 18% GST note will be applicable to interest, the processing rate and other applicable positions, which you should pay in your pocket.
Loss of rewards
Most credit cards exclude EMI transactions from rewards and reimbursement programs. Then, despite charging a high value transaction to your card, you will not get any benefit. For example, if you buy an article worth ₹ 50000 in Amazon EMI using a credit card that sacrifices 5% reimbursement in online expenses, the reimbursement of ₹ 2,500 would be lost. The merchant’s sacrifice does not cost EMI in collaboration with card issuers such as SBI Card, HDFC Bank, Icici Bank, Axis Bank and others. In general, the sacrifice applies to all cards issued by the respective suppliers. However, in some cases, EMI at no cost can be applicable only in selected credit card variants. Therefore, it is crucial to verify if your card is eligible.
Timely payment
In addition to these key factors, you must ensure the EMI as you should avoid financial charges and backward payment fines. Moreoover, when buying a product in EMI, its credit limit is blocked for the total amount of the transaction and gradually releases as it pays, which can increase its initial credit use ratio. This could be a group for people with a single credit card with a low credit limit, since a high cur can affect the credit score.
Opt in whether you should opt for a cost?
Non -cost EMIs are quite useful for people who need to make necessary high -priced purchases such as devices, consumer durables, etc. But they cannot pay the payment in advance. They provide flexibility to buy the purchase of products and defer payment for several months, without interrupting their cash flow.
However, additional costs such as processing rates, impact on their credit limit and possible sanctions should be considered before opting for an emi at no cost. Always weigh the benefits against possible difficulties before processing.
(The writer is Business Director, Credit Cards, Paisabazaar.com)
Posted on April 14, 2025