No cost EMIs are really a boon for people who cannot afford higher interest rates on various loans. Shopping is always a pleasurable experience although dipping into your savings all the time is not considered as a good strategy in this regard. This will naturally leave you vulnerable towards meeting the costs of sudden emergencies or unforeseen situations where instant cash-based transactions will be required. In such scenarios, buying things on no-cost EMIs may sometimes be regarded as a great option. No cost EMI indicates that you will not have to pay any additional costs which are over and above your principal amount that has been loaned against the purchase in question. Availing of the no cost EMI naturally means zero interest above the actual purchase/product cost.
Those offering no cost EMIs will naturally adhere to the RBI guideline of not providing loans/EMIs at 0% interest rate and they ensure this by deducting the total interest that you will have to pay from the product price. Hence, no cost EMI is basically like a discount that is provided on the product cost and this is equivalent to interest payable by the buyers for the items purchased. You can always consider something like a Bajaj Finserv EMI Card for instance which is one of the most popular no-cost EMI products on offer. The EMI card will come with a loan amount which is pre-approved and helps you divide the purchase sum into EMIs or equated monthly instalments throughout a tenure which is customized.
During this period, you will have to repay just the actual product price minus any additional charges or interest. Suppose you purchase a gadget for Rs. 20,000 and you choose a tenure of 5 months. In this scenario, you will have to pay just Rs. 4,000 every month for repayment minus any interest. IF you are unclear about the calculation or you don’t want to take any risk of error, you can anytime use the Loan EMI calculator available online these days. All you have to do is just select the type of loan and provide the interest rate and tenure; the rest will be taken care of by the calculator. The no-cost EMI helps you tap into the chance to make deferred payments. Hence, you can purchase higher-value products right away without having to pay for them instantly at the same time. No cost EMIs do not require any extra interest related charges. This gives you the convenience of spreading out the tenure for repayment throughout a longer period, depending upon your capacity to save and repay the money. You can also avoid your credit card for making purchases since these have much higher interest rates in the bargain. Since the loan amount remains pre-approved, you do not have to apply afresh for credit as well.
You can apply online for the EMI Card without any hassles at Bajaj Finserv. You should check eligibility, make the initial payment and you will get the formalities conducted thereafter. The no cost EMI works via two methods, namely whenever the discount is equal to interest. This is the commonest way for retailers to provide no-cost EMI plans. The applicable interest amount will be provided as a discount upon the product. Suppose you wish to buy something priced at Rs. 30,000 and with a three-month tenure, the rate of interest, if it is 15%, will necessitate payment of interest of roughly Rs. 4,500. In the no cost EMI plan, you will not get any discount and will be paying the original product price in EMIs. If you pay upfront, you will get this discount of Rs. 4,500 and means that you buy the item for Rs. 25,500 ultimately. Buying with no cost EMI means that you pay Rs. 30,000 which is divided into EMIs. Part of this goes to the retailer in question while the interest will be taken by the financial institution.
It also works when the interest will be added to the product cost. Suppose you want to buy a television priced at Rs. 15,000. Under no-cost EMI plans, you will get this at approximately Rs. 17,250. The interest which is 15%, will be added, i.e. Rs. 2,250 to the price of the product which you will pay through EMIs. At times, the interest portion is covered as the processing charges as well.
Some other aspects worth noting
No cost EMIs are widely available these days including Bajaj Finserv and e-commerce players like Flipkart and Amazon as well along with several other reputed financial institutions. You can readily take advantage of this helpful facility while saving interest charges, additional expenses or down payment as well. It is ideal for the festive season or bulk shopping within your budget. It also works nicely with regard to exchange offers too. Repaying on time will also help you build your credit history.
You can buy something valuable instantly without paying the whole amount upfront, saving on major budgetary hassles and also taking advantage of the zero-interest facility. With the no-cost EMI scheme, there are three key parties involved, namely the merchant, you or the buyer and of course, the financial institution or bank. The cost of the purchase will be deducted from your credit card limit if you are using this facility likewise. With each EMI that you repay on a monthly basis, the limit will be restored thereafter. When you pay for anything via regular EMIs, the amount will include the processing fees and interest portion while no cost EMI means that the price becomes EMIs that are free from interest. This is the beauty of the no-cost EMI facility and you should use it responsibly in times of need as well.