Know About No Cost EMI – The Actual Cost Of ‘No-cost Emi’ You Pay
You want to buy a mobile phone, but you don’t have sufficient money. Don’t worry. E-commerce websites like Flipkart and Amazon offer you that you can buy a mobile phone on No Cost EMI, by taking a loan on a credit card or debit card. They also offer a discount. You decide to go for it. Thinking you made a good buying decision? Here is what actually happens:
Meaning Of No Cost EMI
No Cost EMI is an offer by which you pay your EMI provider only the product price, equally divided over your
repayment timeline. For example, if you buy an Rs.36,000 item at a 9-month tenure, you will pay your EMI provider Rs.4,000 every
month for 9 months, amounting to a total of Rs.36,000 (this excludes GST and other taxes that may be charged by your bank.)
“No Cost EMI” sounds like you don’t have to pay any interest on the loan while you purchasing something online. But in reality, you pay the interest. Your bank will take back the discount in the form of interest. RBI rules don’t allow any interest-free loans. The companies either give an upfront discount or offer cashback equivalent to the interest amount.
How No Cost EMI works?
There are three stakeholders in a no-cost EMI. The first one is the retailer, the second one is bank and the third one is the consumer. Usually, banks offer no-cost EMI on credit cards. If you don’t have a credit card of the bank that offers the scheme, you can’t get the “no-cost EMI” deal. You have to option of opting for an EMI card from a non-banking finance company. In the case of Bajaj Finserv, you have to pay a fee for the EMI card. The retailers offer no-cost EMI only on select products—usually on products they want to sell faster. In case of a no-cost EMI, the retailer is willing to give a discount equivalent to the interest a customer pays. The distributor or original equipment manufacturer (OEM) pays the discounted interest amount to the customer.
No cost EMI is available on credit cards from all major banks (Axis, ICICI, HDFC, Citi Bank, SBI, IndusInd, Yes Bank, Kotak, RBL, HSBC, and Standard Chartered)
EMI provider will take 3-5 working days to process your EMI. Once done, your EMI will be charged on a monthly basis, as per your credit card billing cycle or payment instructions with your EMI provider.
No Cost EMI Frequently Asked Questions
1. No Cost EMI means?
No Cost EMI is an offer by which you pay your EMI provider only the product price, equally divided over your
repayment timeline. For example, if you buy an Rs.18,000 item at a 9-month tenure, you will pay your EMI provider Rs.2,000 every
month for 9 months, amounting to a total of Rs.18,000 (this excludes GST and other taxes that may be charged by your bank.)
2. Which payment methods/ instruments can I use to get a No Cost EMI?
No cost EMI is available on credit cards from all major banks (Axis, ICICI, HDFC, Citi Bank, SBI, IndusInd, Yes
Bank, Kotak, RBL, HSBC, and Standard Chartered)
3. Are there any fees or down payment?
There are no processing fees or down payment for these transactions. Your bank may levy GST or other taxes
on the interest component of the EMI.
4. Can I avail of the No cost EMI offer along with the Exchange offer?
Yes! you can. In that case, your EMI amount will be calculated on the product price while the exchange value
would be provided separately as cashback after successful pick up of the old product.
5. Will my bank continue to charge me interest?
Yes! Your bank will charge you interest. However, this interest charge will be provided to you as cashback in
your Paytm wallet on or before 45 days of successful delivery of the order, effectively giving you the benefit of a
No Cost EMI*.
6. How will my EMI be charged?
Your EMI provider will take 3-5 working days to process your EMI. Once done, your EMI will be charged on a
monthly basis, as per your credit card billing cycle or payment instructions with your EMI provider. Please
check with your provider for specific details.
Conclusion:
You must check all options for the product in other stores – both online and offline and see if you can get the product at a better price if you do not opt for EMI. If the difference is substantial, it is better to opt-out of EMI.
