The concept of no-cost EMI offers has become very popular in the last few years. It’s a lucrative scheme that consumers find hard to ignore, as the option of not having to pay any interest on the products they purchase is hard to let go of. However, a no-cost EMI offer doesn’t work the way you think it does. So, what is it, and how does it work? In this article, we are going to look at the concept of no-cost EMI, and how does it work to your benefit!
What is a No Cost EMI?
For a layman, no cost EMI means only one thing, that the product you are buying comes at zero percent interest and you won’t have to pay anything extra apart from the price of the product. However, that is not the case as it’s not completely a no-interest loan. Every time you take out a no-cost EMI loan, the bank servicing that loan gets a discount in the form of interest. That means, there is no 0% interest. So, how does it work? Let’s find out.
How Does it Work?
No cost EMIs work in one of two ways:
- The most common way is to let go of the discount on the product and pay that amount to the bank that covers the interest cost
- The less common way is by adding up the interest rates to the final price of the product to make it look like a zero-interest loan
So, if it’s not a zero percent interest loan as advertised, how does it help you ‘the consumer’?
Prevents Overshooting of Budget
It’s pretty simple, many times a consumer may want to buy a product that overshoots their budget, and it is during these times that a no-cost EMI option comes in handy. Therefore, consumers may choose to dig into their savings to get the product they want by making an upfront payment. A no-cost EMI option helps the consumer to get that same amount without having to dig into their savings or overshooting their budget to purchase that latest piece of hardware.
Helps you Build a Credit History
Your credit score is one of the most important numbers that help you get loans, credit cards, and other types of borrowings. Therefore, it’s important to have a good credit score to qualify for loans, cards, etc. By taking out a loan instead of opting to pay upfront, and making timely repayments, you can slowly build up a good credit score that reflects well on your credit history helping you get loans of a higher amount in the future which you can use to purchase high-value items like a property, car, etc.
Stops you from Indulging in Impulse Buying
One of the ills of the internet age is the lure of discounts and schemes that encourage consumers to impulse buy products that they don’t really need. They simply make those purchases due to customized offers, and constant notifications that sublimely motivate people into buying the product. However, when you take out a loan to make a purchase, it’s generally a well-thought-through decision as you would need to service that loan by making timely repayments. Therefore, there is very little chance that anyone would indulge in impulse buying by taking a loan to buy a product they don’t really need.
No cost EMI offers benefits consumers in multiple ways and helps them purchase high-value items without any additional stress on their finances. Moreover, it also helps business owners make better sales by offering consumers easily accessible loans via online payment gateway integration which they can pay off choosing a repayment tenure and EMI option that best suits them.
So, now that we have discussed all no-cost EMI offers, we hope that you were able to understand what it is? How does it work? And how you can benefit from these schemes to make better buying decisions as a consumer!
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