What’s the hidden cost behind ‘NO COST EMI’ offers?
Umang Revari
Helping businesses discover their true potential through neuro-marketing. Let’s make your brand unforgettable.
In the world of no-free-lunch, you are believing in getting such loans from the Banks for free? Let me explain you with a scenario. For instance, you have a budget of ?50,000 but you wish to buy a mobile phone of ?69,900. And you come across an offer on e-commerce websites suggesting to take a loan on credit card with ?11,650 EMI for 6 months and no additional interest. They also offer an alternate discount of 13% or ?2,576. Thinking you see a budget-friendly buying decision, you go for the no-cost-EMI. But here is the marketing gimmick you got trapped into:
As per the RBI, no Bank can offer 0% interest EMI and they have to charge some amount to the loan takers (here, you). Therefore, although the offer made you believe you did not pay any interest, you did! Let me explain you how. When you opt for no-cost EMI (or interest-free EMI), you miss out the alternate discount and the issuing bank takes it as processing fees or under some other name. Also, there will be ‘no-cost’ or no interest on the EMI only if you agree to pay in specific no. of months. Have a look at the ongoing offer from Amazon:
Although the advertisement on Amazon for iPhone 11 says you can opt for EMI from ?3,290, there will be additional interest applicable to it and the total amount will cost you ?81,341 and in 24 months. When you opt for 6 months EMI at ?11,650 your alternate discount goes to the bank as a part of 13% interest to the interest-free EMI and you end up paying the complete price of ?69,900.
To conclude, should you go for no-cost or interest-free EMI? Your call. If paying the upfront amount fits your budget and the discount attracts you more, go for it. If paying the amount in installments even with no discounts is convenient, you know what to do.
I am a digital marketing and public relations specialist and a founder of a digital company. I will be sharing such marketing tricks and tips on LinkedIn. Follow me for more such content.
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