The Real Cost of No Cost EMI

People are buying a lot of stuff using the No Cost EMI thinking that they just have to pay the amount without any interest. For example, if they are buying a gadget for Rs 12K and they choose the No Cost EMI for 3 months, they will be paying Rs 4K per month for 3 months. Now looking at this, it's a great deal. You don't have to pay everything at front, you can pay UT in parts without paying anything extra.

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But there is multiple problem with the no cost EMI. First of all, it is not really a No Cost. The thing is, the seller reduces the amount of the interest which you might incur when you are paying in parts. But the problem is we still have to pay the GST and thus No Cost is not really a No cost. For example, you want to get a gadget for Rs 12K and with interest you are supposed to pay Rs 12.3K to the bank.

So the seller with reduce the amount to Rs 11.7K and thus create a No Cost EMI on it. But when the EMI gets created you have to pay processing fee as the loan gets created. And along with thar you have to pay GST on the interest. The interest might be reduced by the seller but the GST you have to pay. Thus you end up paying around Rs 12.1 K for the gadget Rs 12K. I know it's not a big increase but still No Cost EMI is actually not really a No Cost.

Next is people start to buy the gadget with No Cost EMI thinking they have to pay minimum amount every month which is manageable. But the problem is these small amounts becomes huge as the times goes by and thus eventually that will become a big amount going for EMI from your salary.

So next time when you see a No Cost EMI then don't think it's a no cost. There is a cost attached to it.

Posted Using INLEO