No-cost EMI, also known as zero-cost EMI, is a payment option allowing customers to purchase products in monthly installments without incurring any additional charges. It is a popular financing option in India and is offered by many online and offline retailers. The customers don’t pay for the products.
What is an EMI?
To understand no-cost EMI, let’s first understand how traditional EMI works.
EMI stands for Equated Monthly Installment, where customers make payments over a period of time rather than paying the entire amount upfront. It is a way to pay for a loan or credit in equal monthly payments.
EMIs payments, typically, are made on a monthly basis and consist of two components: the principal amount and the interest. The principal amount is the actual cost of the product or service, while the interest is the additional charge that the lender (usually a bank or financial institution) levies on the loan.
Now, in the case of no-cost EMI, the lender absorbs the interest charges, and the customer only has to pay the principal amount each month. It means that the customer can purchase the product or service without paying any additional charges beyond the price of the product.
No-cost EMI is an excellent option for customers who want to purchase a high-value product but do not have enough funds to pay for it upfront. It allows them to spread the product cost over a time period, which makes it more affordable and manageable.
Example of No-Cost EMIs
If a customer wants to purchase a smartphone that costs Rs. 60,000, they can opt for a no-cost EMI and pay Rs. 10,000 per month for 6 months instead of paying the entire amount upfront.
No-cost EMI is also a good option for customers who want to improve their credit scores. When a customer takes out a loan and makes timely EMI payments, it reflects positively on their credit score. However, with traditional EMI, the customer has to pay interest, which can be a burden. With no-cost EMI, the customer only has to pay the principal amount, making it easier to make timely payments and improve their credit score.
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Is No-Cost EMI and Interest-Free EMI the Same?
One thing to note is that no-cost EMI is not the same as interest-free EMI. In the case of interest-free EMI, the lender does not charge any interest on the loan, but the customer may still have to pay processing fees or other charges. With no cost EMI, the customer does not have to pay any additional charges beyond the price of the product.
How to Avail No-Cost EMIs?
No-cost EMI is offered by several retailers, both online and offline. Online retailers such as Amazon and Flipkart offer no-cost EMI on a wide range of products, including smartphones, laptops, TVs, and appliances. Offline retailers such as electronics stores and appliance stores also offer no-cost EMI on products.
To qualify for no-cost EMI, the customer has to meet certain eligibility criteria. These criteria may vary depending on the lender and the retailer, but they typically include a minimum income requirement and a good credit score. The customer also has to have a credit card from one of the banks that the retailer has a tie-up with.
To purchase a product on a cost-effective EMI, the customer has to select the no-cost EMI option at the time of checkout. They will then have to provide their credit card details and complete the transaction. The EMI amount will be automatically debited from the customer’s credit card each month.
No-cost EMI is a convenient and affordable financing option for customers who want to purchase high-value products. It allows them to spread the cost of the product over a while and avoid paying any additional charges beyond the price of the product.
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Benefits of No-Cost EMIs
Some of the basic advantages of No-Cost EMIs are-
No Upfront Payment: With no-cost EMI, the customer does not have to pay any upfront payment or deposit while purchasing a product. This is especially beneficial for people who do not have a large amount of money saved up for big-ticket purchases such as electronics, appliances, and furniture.
Interest-free Payments: With no-cost EMI, the customer does not have to pay any interest on their payments. This means that they will only pay the exact cost of the product and not have to worry about additional costs such as interest or processing fees.
Flexible Repayment Options: No-cost EMI typically offers flexible repayment options, allowing the customer to choose a payment plan that suits their needs. This allows them to make payments in smaller, more manageable installments of 6–12 months rather than having to pay a large sum upfront.
Increased Purchasing Power: No-cost EMI enables customers to make purchases that they may not have been able to afford otherwise, as they do not have to pay the entire cost upfront. This can lead to increased sales for businesses.
