What is no-cost EMI? Do they involve any cost in it?

Vimal Joshi
Updated: 13 Dec 2021, 05:36 PM IST

To save money on interest, you can make payment for your online purchases via interest-free equated monthly instalments (EMIs). Let us explain how this is certain to save you money

Customers who hold a credit card of a bank can avail the option of no-cost EMI

Customers who hold a credit card of a bank can avail the option of no-cost EMI

When you buy a certain product and want to pay in EMIs without having to pay any interest on it, you can go for no-cost EMIs. This means you buy a product and pay for its price in equated monthly instalments.

For instance, if you buy a smartphone for 27,000, you can pay for it in nine instalments of 3,000 each, or three instalments of 9,000 each. This way, you staggered the payment across a few months, and didn’t have to pay an interest on it.

However, this doesn’t mean there are no charges at all. Let us explore what all charges can be there in the low-cost EMIs.

First and foremost, there could be some processing fee which can go up to one percent of the product’s price. On the top of it, there could be pre-closure charges if you wish to retire your debt prior to the date of closure.

Importantly, it is usually approved only to the customers with a credit card of a bank with which the online merchant has tied up with. One of the key advantages of no-cost EMI is that one can get the loan approved instantly without having to visit the bank branch.

For instance, if you want to buy a laptop on Amazon and the digital marketplace has a tie up with HDFC Bank for no-cost EMIs, then the buyer who possesses a credit card with pre-approved credit limit will be eligible for zero-interest EMIs.

However, now there are some fintech players in the market such as Zest Money that offer no-cost EMI options even to those who do not have a credit card. One must first ensure that the online merchant has partnered with it. For instance, Zest Money can be used to buy goods on 3-18 EMIs at Amazon and Flipkart.

To sum it up, we can say that no-cost EMI is an option usually for customers who hold a credit card of a bank with a pre-approved overdraft limit. This is a good alternative for customers who don’t want to loosen their purse strings wide open right at the time of purchase.

First Published: 13 Dec 2021, 05:36 PM IST
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