Are ‘No-cost EMI’s’ really no cost? Read on..

 

It’s the festive season, and during this occasion, many companies and online retailers come up with lucrative offers, including no-cost equated monthly instalment (EMI) schemes. Many often wait for festive season sales to purchase home appliances, new vehicles, bikes and gadgets.

The no-cost EMI offers allow consumers to buy different products in instalments without paying additional interest or charges. The no-cost EMI scheme is widely availed by many for owning a new gadget or home appliance. However, before making the purchases, you should know a few aspects of the scheme.

When you choose the no-cost EMI or zero-cost EMI option to make a purchase, it means you will be paying monthly instalments for that product, but without any interest or charges. This implies that you will be paying only the actual price of the product, just divided into EMIs. Several banks offer no-cost EMI facilities in different options. Some lenders also provide zero-down payment plans on certain products where you do not need to pay any amount upfront and can easily make monthly instalments. On the other hand, a few banks require a minimal amount as a down payment, and the balance amount is to be paid in EMIs.

While going for a no-cost EMI, you can choose different repayment tenures per your need. It can range anywhere from 3 months to 24 months. Now, if the scheme sounds perfect for your next purchase, then there are certain things you should be aware of.

While the no-cost EMI entails no interest on the principal amount, it doesn’t necessarily mean that you will be paying just the actual cost of the product. Several lenders charge a processing fee for the no-cost EMI. This allows the bank to charge the interest as a processing fee. In addition, while opting for a no-cost EMI, you do not get the discount offered on that product, which you could have otherwise availed of.
Hence, it is better to analyse these factors and only then go for a no-cost EMI. It’s always advisable to read the terms and conditions before deciding to avail of the no-cost EMI scheme.