You all must have heard the name of No Cost EMI. To attract customers, companies now offer the option of No Cost EMI. Through this, people can buy the goods of their choice in easy installments instead of paying a lump sum amount. The special thing is that people are now getting this facility not only online but also at some offline stores. But do you know the truth behind it?

Often during the festive season, No Cost EMI comes as a big support. Through this option, customers can buy goods in easy monthly installments without paying interest. This great option not only makes it easy to buy expensive products, but people are also able to buy the things they need. Goods are available without paying a lump sum amount, due to which this facility is being liked by the customers rapidly.

What is the truth of No Cost EMI

On hearing the offer of No Cost EMI, customers feel that they are getting goods in installments without interest, but the truth is completely different from this. According to RBI, interest is necessary on any loan, then how is this zero percent interest? Yes, according to RBI rules, customers cannot be cheated in the name of "No Cost EMI". Actually, companies adjust the interest in hidden charges or discounts. There is no discount on MRP on some items, while processing fees are added on some. That is, these offers are a way to lure customers.

How to understand the whole game

No Cost EMI sounds better, but what happens is that companies remove the discount on the product in advance. For example, if a mobile is worth Rs 25,000 and a discount of Rs 3,000 could be given on it in the market, then that discount is removed while taking No Cost EMI. In such a situation, what happens is that you are paying the full price of the phone. That is, in no cost EMI, "no cost" is just in name.

Misconception of customers

Usually in no cost EMI, the customer feels that he is taking the loan in equal installments without paying interest, but this is not the truth. Because the company already buys the product from the manufacturer at a huge discount, like a mobile worth Rs 25,000 for 18-20 thousand. Then it is sold to the customer in EMI at the same price i.e. Rs 25,000. That is, the company does not incur a loss, on the contrary, it makes a profit. Therefore, in no cost EMI, "no cost" is just in name, the real price is hidden somewhere else. That is, if you are thinking of buying a product on no cost EMI, then caution is necessary.

That is, by taking no cost EMI, not only do you miss out on the discount, but on the contrary, processing fees, 18% GST and bank charges can also be recovered from you. In such a situation, this deal is not as beneficial as it is shown to you. This is the reason why whether it is a personal loan, home loan or auto loan - in every case, interest is included in your EMI.

(Note: This article is for information only and should not be considered as investment advice in any way, suggest consulting financial advisors for investment)