All You Need To Know About No Cost EMI

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    All You Need To Know About No Cost EMI
    All You Need To Know About No Cost EMI

    How does No Cost EMI Works? No cost EMI is an amount that you need to pay before the settlement of the product. This amount is calculated on the interest rate and tenure for which you have opted. And, if you end up paying it in advance of the due date, then this step will be named ‘No Cost EMI’ in your credit card bill. On its face value, paying no-cost EMI appears to be as saving money but this is true only until you understand how such things work.

    Would you like to buy a laptop but you don’t want to spend much money? The solution is to know how no cost EMI works or Zero Interest EMI. The zero interest EMI option allows a consumer to get the product in installments during a price tag of the product minus some percentage. This promotional program was launched by several mobile operators around the year 2005 and has now been adopted by all eCommerce companies. While this seems like a great deal, it isn’t so. There might be zero interest rates, but there is still an interest that needs to be paid along with other bank charges.

    Simply put, the no-cost EMI scheme allows you to pay the cost of the product in equated monthly installments (EMI), just as if you would under a normal financing scheme. This can be done through credit and debit cards, as well as EMI cards. What makes it unique is that there is no additional interest levied – in other words, the interest on the loan is covered by the merchant.

     No-cost EMIs can sound like no-interest loans, but that is not what they are. The RBI does not permit interest-free loans. In order to lure customers, banks and other lenders have adopted the term “no-cost EMI’ and “discounted EMIs”. In reality, you will pay interest on the entire loan amount, including the discount received at the time of booking your loan. However, the amount waived off becomes a part of the total amount to be repaid, making your monthly installments less and ensuring you don’t overpay.

    When you apply for a no-cost EMI scheme, the bank does not give you a discount. It only increases the price of the product to include interest expense. In the case of ‘zero-cost EMI’, the downsides are that it is not available when the interest rates are down, companies will hike the interest rates when rates are going higher and offer zero-cost EMI. The other minus point is the fact that customers who choose to pay EMIs in cash get no benefit from zero-cost EMI due to limited availability.

    What exactly does this mean? Most banks have a similar scheme for credit card holders, but the rules governing it are not so clear-cut. However, if you pay in advance, the Smartphone would just cost you Rs 42,500. You may purchase it at Rs 42,500 off the regular price. If you choose the No Cost EMI option, you would end up paying Rs 50,000. You do not receive the Rs 7,500 reduction, which is applied to the loan’s interest. The entire cost of the Smartphone is divided between money paid to the store and interest paid to the financier.

    A no-cost or interest-free EMI plan is one in which the bank will add the interest amount to the product cost. This makes the total price of your product Rs 17,250 in such a case. If you are opting for a three-month EMI, then the monthly installment would be Rs 5,750. The no-cost EMI by Pinelabs may cover processing costs as well.

    When you buy an item that has a No Cost EMI option, you do not need to pay the item amount and your first EMIs at the same time. You can only make the payment when you receive your credit card statement. The interest charged on your card’s outstanding balance will be reduced with this package, which helps you save money..

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