No-Cost EMI is a payment option that allows customers to make equal monthly instalments (EMI) on their purchases without paying any interest. This option is available on credit cards, debit cards, and others like EMI Cards. Customers can avail of No-Cost EMI online as well as offline purchases.
To avail of this facility, customers must select the No-Cost EMI option at the time of checkout. The total purchase amount will be divided into equal monthly instalments, and the customer will only need to pay the principal amount each month. No interest or processing fee will be charged on the transaction.
No-Cost EMI is a great way to finance big-ticket purchases, and it helps customers repay their debt in manageable monthly instalments without paying any interest. This payment option is widely available and can be availed of by customers with different credit profiles.
Did You Know? Meta declared India to be the first country where advertisers can use No-Cost EMI for promoting their products on Meta platforms.
Meaning of No-Cost EMI
No-Cost EMI is an EMI (Equated Monthly Installment) plan offered by financial institutions and banks in India that allows consumers to purchase products on EMI without paying any interest on the loan amount. The loan amount is divided into equal monthly instalments and is deducted from the customer's account every month. The repayment period for No-Cost EMI is usually between 3 to 24 months.
It is a convenient payment option for consumers who wish to purchase expensive products but need more cash upfront. It helps them spread the product's cost over a while and pay for it in monthly installments. It also benefits sellers by increasing the chances of selling expensive products.
There are a few things to keep in mind before availing of a No-Cost EMI offer. Firstly, make sure that you understand the terms and conditions of the offer, and Secondly, check the interest rate that will be applicable if you decide to convert the loan into EMIs. And lastly, compare the Cost EMI offer with other EMI and loan options to ensure you get the best deal.
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How No-Cost EMI Works
No-Cost EMI is an interest-free loan typically offered by financial institutions and retailers for purchasing expensive goods. Under such a plan, the customer pays the same monthly installment as a regular EMI plan but is not charged any interest on the loan. This means that the customer pays only the principal amount of the loan over the tenure of the EMI, not the interest that would usually be charged.
These are usually offered for a limited period, and the customer must repay the loan within this period. The customer also has the option to pre-pay the loan at any time without any penalties.
No-Cost EMI plans can be a good option for customers looking to finance the purchase of an expensive good but who want to avoid paying the interest that is typically charged on an EMI loan. However, it is essential to remember that the customer will still need to repay the total amount of the loan, even if they pre-pay it, and that the interest-free period may be shorter than the tenure of the loan.
The interest rate charged on the loan amount is 0%. The customer is only required to pay the principal amount of the loan in EMIs. No-Cost EMIs are available on credit cards, debit cards, and Bajaj Finserv EMI Network Cards. Suppose you want to purchase a product that costs ₹10,000 and opt for a No-Cost EMI plan of 12 months. In this case, you will have to pay ₹833 per month for 12 months as EMI. The total amount you will pay at the end of the tenure will be ₹10,000 only, and there will be no additional cost involved.
Benefits of No-Cost EMI
Some benefits of No-Cost EMI are:
- No-Cost EMI plans are essentially interest-free loans that are repaid in EMIs. Banks and NBFCs offer this facility to customers at the time of purchase of a product. The EMI amount is calculated considering the tenure and the prevailing interest rate. The processing fee, if any, is also added to the EMI amount.
- The main benefit is that the customer only pays the product price and nothing extra, making it easier for customers to afford big-ticket purchases.
- Another benefit of it is that it helps to improve your credit score. When you opt for a No-Cost EMI plan, the bank reports your timely EMIs to the credit bureau, which, in turn, helps to improve your credit score.
- Lastly, No-Cost EMI plans also help you to save on taxes. The interest component of an EMI is tax-deductible under certain conditions, and this means that you can save on taxes by opting for it.
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Difference between EMI and No-Cost EMI
The main differences between a no-cost EMI and a regular EMI can be better understood by the help of the following table.
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No-Cost EMI plans can be a great way to finance big-ticket purchases, such as electronics, appliances, or furniture. They can also help you manage your finances better by allowing you to spread out the cost of a purchase over some time. However, it is essential to remember that only some No-Cost EMI offers are genuine at no cost. Some banks or retailers may charge a processing fee, which will be added to the overall cost of the purchase. Therefore, it is always important to read the terms and conditions of an offer before availing of it.
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