2024-03-21 17:56:41
No Cost EMI : A No Cost EMI is an installment plan that allows you to purchase a product in monthly installments without paying any additional interest or charges. But is the claim of no interest charged true in this scheme? Let’s find out…
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No Cost EMI
No cost EMI does not include interest or processing charges. But it is also said that in regular monthly installments, both interest and processing fees are added. In fact, there’s no extra money to pay for this plan? The question arises for many people.
Free Installment and Interest Rate: It is customary for companies to offer various types of offers to attract customers on the eve of festivals and festive seasons. During the festive season, companies and e-commerce websites offer interest-free EMI options to customers while purchasing products online.
It is said that these No Cost EMI plans are being implemented so that customers can buy multiple products instead of buying one product while the products purchased now can be paid in monthly installments without any interest in this offer.
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Different items can be purchased in installments. However, it is said that no additional interest is charged.
Many banks claim to offer interest free EMI facility. Some lenders also offer zero-interest payment plans for select items only. In which you don’t have to pay anything initially, you can pay for the product in monthly installments.
Advance payment
In some cases, you have to make an upfront payment, while in some it is said that monthly EMI payments are sufficient. But is it really true that you don’t have to pay more than the price of the product? Know how No Cost EMI works
No interest charged?
No Cost EMI does not include interest or processing charges. In no cost EMI scheme, the re-payment EMI is equal to the cost of the product. In this, the interest amount is paid by the seller or merchant.
No interest is charged to the customer
Sometimes, the interest or processing fee is adjusted in the form of rebate or cashback. The purpose of doing this is to pay the EMI amount equal to the actual cost of the product.
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Let’s take an example to see the difference between regular EMI and no-fee EMI. 9,999 on a product worth Rs.9999, the interest charge on No Cost EMI is adjusted from the rebate. Those who buy the product in three installments will have to pay this amount in three EMIs of Rs 9999 for Rs 3333.
If this is your regular EMI then you will have to pay the EMI along with interest and installments of Rs 3333 plus interest. In no cost EMI plan, this interest will be reduced for the customer.
Agreement between the seller and the issuing bank
No-fee EMIs are generally offered for 3, 6 or 9 months. It depends on the agreement between the seller and the issuing bank. The interest amount is usually borne by the product seller, who offers the goods at a discount to offset the interest. Customers benefit as they can purchase in installments without any additional interest.
Discount on interest free EMI plan
Any loan provided by a bank has a processing fee. But even if they don’t collect it from you, they will convert it into No Cost EMI interest instead of giving you the usual discount. Hence, no discount can be availed for the item.
In 2013, RBI announced the implementation of No-Cost EMI Scheme. From the 2013 circular it is clear that there is no such thing as zero percent interest or no-cost EMI.
What are the Disadvantages of Interest Free EMI Scheme?
No Interest Even if the consumer does not pay any interest charges, the overall cost of the product will be higher. Interest-free installment plans can encourage individuals to spend more, and no cost EMI can lead to becoming a borrower in the long run.
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