No Cost EMI Schemes Trap by Retailers: Mystery Unfolded

With online festive sales around the corner, the concept of no cost EMI scheme has spread like a wildfire. But does this scheme is really existent in the world where there is no provision for free lunches? Well, let’s unfold this mystery.

No cost EMI scheme

To be frank, the concept of no cost EMI is flawed and non-existent. What really happens is the online lenders partner themselves with certain financial institutions offering consumer durable loans to buy the electronic products and gadgets and charge the customers an exorbitant interest in between 16 per cent to 24 percent.

As per the RBI notification issued in the year 2013, zero percent interest concept- is a marketing gimmick to trick the customers. The companies generally camouflage the interest rate in the different ways and charge the same to the customers.

There are two methods through which the customers are trapped.

Method 1

The online companies forfeit the discount that is offered to you on the product- For example, you buy an iphone worth Rs 54,000 under the EMI plan, the interest charged would be 15% and you would have to pay an interest of Rs 8100, in no cost EMI plan the company will charge you

Cost of Phone	Rs 54,000
Discount prevailing	Rs 8100
Cost of Phone after discount	Rs 45900
Total interest to be paid as per the EMI scheme	Rs 8100
Total cost of the phone that needs to be paid by you	Rs 62,100

This is how the retailer will add the interest in the total cost of the phone.

Method 2

When the retailer adds the interest in the price of the product

Another method through which the retailer may charge you the amount on zero cost EMI scheme is:

Cost of the phone	Rs 54,000
Interest to be paid under the EMI scheme	Rs 8100
Offer price under zero cost EMI scheme	Rs 62,100
Total cost to be incurred by the consumer	Rs 62,100

Therefore, if the consumer has to pay the EMI for the said product for the period of one year, the EMI calculated would be Rs 5605.

In the end, we can conclude that no cost EMI scheme in festive sale is nothing but a gimmick to trick the innocent customers. When we look deeply into the terms and conditions we understand how they camouflage the amount.