Many people find paying for high-cost products like laptops, mobile phones, refrigerators, televisions, etc., difficult in one go. That is why they use their credit cards to purchase their desired item now and pay for it later in EMIs. However, not everyone has a credit card, and many consumers are still susceptible to using credit. Therefore, they look for an option to buy their favorite phone on EMI without a credit card. Some retailers advertise the no-cost EMI option, using which buyers can purchase big-ticket products without paying extra charges.
The no-cost EMI option is different from a regular EMI plan. Therefore, it is crucial to understand how it works before opting for one.
What is the No-Cost EMI Option?
Purchasing something and agreeing to pay its price in EMIs is similar to taking a loan against which the buyer needs to pay the applicable interest charges. The financier pays for the purchased product on behalf of the buyer, and the buyer pays back the amount in monthly installments. For such a facility, the financier charges an interest rate the buyer needs to pay along with the principal amount. However, no such interest rates apply when a buyer opts for the no-cost EMI option.
Who Should Consider Opting for a No-Cost EMI Plan?
A no-cost EMI plan is best for those who
- wants to buy an expensive mobile or another product beyond their budget
- does not spend money from their savings to make an upfront payment
- Gets a good deal along with an additional discount
- wants to build their credit history with regular EMI payments
How Does the No-Cost EMI Plan Work?
In a no-cost EMI plan, the buyers purchase the product with a small down payment and pay the remaining amount in EMIs without extra charges. Wondering how it is possible? Read on to know how the no-cost EMI plan works.
The no-cost EMI schemes work in two ways:
The discount equals the interest charge.
A common way for retailers to offer a no-cost EMI option is by giving discounts equal to the interest charges. For instance, if the interest charge applicable to a phone purchase is Rs. 4,500, the retailer provides a discount of Rs. 4,500. As a result, the buyer pays the phone’s original price only in EMIs. However, if the buyers make the payment upfront, they can buy it with a discount of Rs. 4,500. Also, check our other blogs.
The interest charge is added to the product price.
Another way the scheme works is by adding the interest charge to the product price. For instance, if a phone costs Rs. 25,000, the seller adds the interest charge to its price and sells it at a higher cost. Therefore, when a buyer selects a no-cost EMI plan, their EMIs contain the principal amount and the interest charge. Some retailers cover the interest charge as the processing fee.
Technically, a no-cost EMI plan means a buyer pays for a product in EMIs without any interest charges. The buyer pays only the product’s actual price in installments. Therefore, it is an excellent option for those who want to buy a phone on EMI without a credit card.
