In online shopping, many products are sold at the option of ‘No Cost EMI’. Do you really know what that means? With No Cost EMI, companies offer discounts and attractive offers. In such a situation, should you buy any goods only after seeing No Cost EMI or not? Will you benefit from it or not? We are telling you what is No Cost EMI and how much this scheme does for you.
These days, many retail stores including e-commerce giant Amazon and Flipkart are enticing consumers with their attractive deals this festive season after the lockdown was lifted. After six months, people are shopping fiercely.
The country’s economy seems to be slowly coming back on track. In such a situation, many big private banks have colluded with e-commerce companies. In this, products are also being sold on the No Cost EMI option with huge discounts and attractive offers from consumers.
What is ‘No Cost EMI’
No-cost EMI is a recipe adopted to sell as many items as possible. The first way is that at no cost EMI you have to buy the product at full price without any discount. In this, the companies give the rebate given to customers as interest to the bank. The second way in this is that the companies already include the interest amount in the price of the products.
How does this scheme work
No Cost EMI is usually divided into three parts. This includes retailers, banks and consumers. There are some banks that offer the option of No Cost EMI on products. However, to choose this option you must have a credit card of that bank. Apart from this, you can also take EMI card from Non-Banking Finance Company (NBFC).
Retailers only offer the option of No Cost EMI on products that have to be sold as quickly as possible. Let us know that some EMI cards also have to pay fees. In the event of no cost EMI, retailers give a discount to the amount of interest to consumers.
No cost EMI should be taken
HDFC (HDFC), State Bank of India (SBI), RBL, Yes Bank (YES BANK), Axis Bank (AXIS BANK), ICICI Bank (ICICI) Standard Chartered Bank (SCB) and Kotak Mahindra Bank (KMB) On e-commerce online platforms like Amazon and Flipkart, there is no cost EMI option to buy products. Explain that in most cases the discount on cash does not exceed the EMI. You can call it a means of earning, as well as the old stock can be sold as quickly as possible. Experts believe that it is better not to choose this option for white products (AC, mobile, phone, fridge and washing machine).
Are there any additional costs?
When you choose the no-cost EMI scheme and you buy products from retailers, you may not get some upfront cash discounts associated with them. In addition, you may have to pay additional costs like Goods and Services Tax (GST) as well as processing fees on each installment.
For example, HDFC and Kotak Mahindra Bank charge a processing fee of Rs 199, which comes in the first month’s installment of the product you take. In your card statement, GST will be charged on your purchase in excess of the product price every month.
How to avoid loan trap of ‘no-cost EMI’ scheme
This scheme can become a debt trap for borrowers and buyers. If you are unable to deposit the installment on time, then banks charge extra on your installment with penalty which is 2 to 3.5 percent of the month. Explain that non-transparent EMI schemes were discontinued by RBI due to their non-transparent terms and hidden charges. In such a situation, the consumer should pay the installment on time to avoid any extra charge.