What is No-cost EMI scheme? Know how it works and if it's beneficial or not

No-cost EMIs are lending options that let you make payments on a purchase gradually and interest-free. While this may appear appealing on the surface, there is a price to be paid. This expense typically takes the shape of a discount that you would have otherwise gotten on the goods or services in question.

While making large purchases, credit cards can be useful. You may easily buy expensive items with the EMI options offered by many credit cards. Several banks provide credit cards with no-cost EMIs. Users can buy electronics using no-cost EMI credit cards without worrying about a down payment, processing charge, etc.

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What is a No-cost EMI option?
No-cost EMI may seem like an appealing alternative if you want to purchase a refrigerator, television, or washing machine but do not want to pay the entire price upfront. To provide consumers with free EMIs, vendors work with banks and non-banking financial institutions (NBFCs).

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List of banks participating in No-cost EMIs:

• Axis Bank
• HDFC Bank
• State Bank of India
• Yes Bank
• Kotak Mahindra Bank

How does No-cost EMI work?
If you choose the no-cost EMI, the discount is removed, and you pay the full price for the item. For instance, if someone purchases a product for Rs. 12,000 and selects a 6-month EMI period, they will be required to pay Rs. 2,000 per month. The total amount levied for interest and processing fees is Rs. 0. As a result, the customer must pay a total of Rs. 12,000.

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When should you choose the no-cost EMI option?
In cases when you can’t pay immediately or the entire amount at one goes while purchasing an expensive product. Also, sometimes merchants offer discounts or cashback on credit cards when you buy a product online through the no-cost EMI option.

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What are the advantages and disadvantages of the No-cost EMI option?
Advantages: It enables an improvement in living by allowing the purchase of pricey items in monthly instalments. Zero-interest EMI is now available for additional products including furniture, cosmetics, vacation, etc. as well.

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Disadvantages: Similar to a no-cost EMI credit is a low-cost EMI credit. Consumers might pay far more than they would have if they had paid in cash. A free EMI may lead to impulsive purchases that are bad for the customer. A low credit score could be the result of missed EMI payments.