Equated Monthly Instalments (EMIs) are a great way to make large purchases without putting too much strain on your savings. They allow you to make a large purchase and pay for it over a predetermined period of time, traditionally EMIs came with exorbitant interest rates and additional fees and charges that made them a less preferred way to make purchases, that has all changed now.
What are No-Cost EMIs?
No-Cost EMIs are exactly what their name suggests, carry no extra cost. By no extra cost we mean, no interest, no transaction fees, no processing charges, etc. You pay only the retail price for the product. These are a great way to make large purchases if you do not want to end up paying interest on a product that is already depreciating. This is especially useful when you buy things that depreciate in value quickly like smartphones, electronics, PCs, laptops, etc. Let’s take a closer look at what these actually are.
What can you buy?
No-Cost EMIs are available for select products online, mostly for mobile phones, electronics, laptops, and other larger items. Online vendors mention products on which no-cost EMs are available.
Who offers No-Cost EMIs?
No-Cost EMIs are offered by a few vendors that have partnered with banks. Vendors like Amazonand Flipkart have partnered with Axis Bank, HDFC Bank, ICICI Bank, and SBI to bring their customers the no-cost EMI facility.
What are the RBI Rules?
The Reserve Bank of India (RBI) in a circular in 2013 said that no-cost EMIs are non-existent. In most cases, the retailer camouflages the interest by not providing discount that would’ve been offered with the product otherwise.
What are the benefits?
Product Availability
No-Cost EMIs are great when the product you want to buy is in short supply and you don’t have the entire amount saved up. A no-cost EMI will allow you to buy the product when it is in stock and make the payments over a period of time.
Season Sales
Festive Season Sales are the best time to buy products. A no-cost EMI can allow you to buy all your essential during these sales so that you don’t have to pay the full price once the sale is over.
No Credit Card needed
You want to buy that latest gadget but you haven’t applied for a credit card yet? No problem. Banks like HDFC Bank, Axis Bank, ICICI Bank has tied up with most online retailers to offer no-cost EMIs on your debit card as well. Using a Debit Card instead of a Credit Card can be quite advantageous as it will not allow you to go beyond your savings and cause an overdraft.