No-Cost EMI: 7 Things to Know Before Taking it from Any Bank or NBFC

Purchasing gadgets or electronic devices has never been easier than it is today. The biggest reason for this is the no-cost EMI (Equated Monthly Installment) option being offered by e-commerce or retail stores to make purchases more affordable. Currently, many companies offer the no-cost EMI option to customers to boost their sales. Under this, instead of paying a lump sum amount for items like TVs, refrigerators, ACs, etc., customers get the option to pay in smaller EMIs.

The no-cost EMI has emerged as a popular and attractive option for consumers. As the name suggests, these payment schemes come without any extra charges. However, in reality, there are several catches associated with no-cost EMIs that one must be aware of.

Hidden Charges The 'no-cost' EMI often includes hidden charges like processing fees, down payment amounts, and other administrative charges. Therefore, before opting for a 'no-cost' EMI from any bank or NBFC, one should carefully read the terms and conditions.

Applicable on Selected Products Only

No-cost EMIs are typically applicable only on selected products. The option is readily available for electronics, gadgets, and high-value items. These EMIs are not offered for all types of purchases.

Tie-ups with Financial Institutions Retail sellers offering no-cost EMIs often collaborate with financial institutions to provide this service. The terms of the EMI, including the tenure and eligibility criteria, may vary based on the partnership between the retailer and the financing institution.

Impact on Credit Score

The no-cost EMI option can impact your credit score. If you fail to make the EMI payments on time, your credit score may be adversely affected.

Down Payment While no-cost EMIs are interest-free, there may be a requirement for a down payment.

Repayment Obligation In no-cost EMIs, the repayment tenure is fixed in advance, limiting the flexibility for consumers to choose the repayment period.

Explore Other Options

Before opting for a no-cost EMI, explore other options as well. Taking a loan from a bank or making purchases using a credit card may have a lower overall cost. Some retail sellers may offer no-cost EMIs with discounts or cashback offers. However, it's crucial to understand the catch between these incentives and the EMI terms, as some discounts may be contingent on specific payment methods.