No-cost EMI enables customers to purchase goods without interest for purchases made online or offline.
Before buying anything on No Cost EMI, do research about additional or hidden charges.
If you have ever shopped online, you might be familiar with no-cost Equated Monthly Installments (EMIs). The highly successful program called No-Cost EMI enables customers to buy goods without interest for purchases made online or offline. When we buy something using EMI, we generally pay the full cost of the item plus the interest rate for the specified time period; But, with no-cost EMI, there is no processing fee, no interest, and no down payment required.
We will explain what is no-cost EMI and how businesses offer it to customers.
A consumer can buy a product using EMI option through no-cost EMI scheme without making any down payment, processing fee or paying any interest on the amount. No-cost EMI is a very cost-effective program that enables users to repay the principal amount in equal splits without paying interest. The tenure is usually much shorter as compared to other EMI plans, with a maximum of one year and a minimum of three months.
The RBI guidelines state that no financial institution can offer zero percent interest rate to any user, which raises the question of whether no-cost EMI is a valid program or not. Yes, it is true, but there is a twist in it. When you use the no-cost EMI option, you pay the no-cost EMI to the bank, which is just the retail price of the product. However, the seller and the platform split the cost of the interest.
No Cost EMI is a marketing gimmick as the final amount to be paid by you is set so that the bank interest paid by the platform and seller is passed on to the customer. The additional amount on No-Cost EMI can be paid in one of two ways.
In this example, the discount offered by the seller is equal to the interest on the product. Hence, the no-cost EMI operates on the actual price of the product instead of the discounted price, making it easy for sellers to offer no-cost EMI and charge the consumer the desired amount.
The seller may also include interest in the price of the item as payment of interest. The amount paid by the customer becomes equal to the interest paid by the seller when they opt for the no-cost EMI.
There are additional no-cost EMI deals during the festive season. Now if you are also using it for shopping on Akshaya Tritiya then keep some things in mind. Reports claim that the things that have been given this capability can get expensive. Some businesses charge further processing fees on no-cost EMIs. In addition, you may also need to pay shipping charges for items purchased through this option, but you won’t do so if you make regular purchases.
Before buying anything on Free EMI, you should check the price of the item on other e-commerce websites or stores. Make sure you are familiar with the terms and conditions, tenure, processing fee, pre-closure fee, prepayment penalty and late payment fee of the e-commerce company or store. After looking at all these, you will be able to determine whether this strategy really saves you money or whether the business is misleading you by offering no-cost EMI for selling goods.
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