No-Cost EMI is gaining popularity in India, especially during festive seasons. It allows customers to buy expensive products in easy monthly installments (EMIs) without paying extra interest. However, hidden charges like processing fees or inflated product prices make it essential to understand how it actually works. Even the Reserve Bank of India (RBI) has issued warnings regarding such schemes. While it offers convenience, one must be cautious of hidden fees, credit score impact, and unnecessary expenses.
What is No-Cost EMI & How Does It Work?The term "No-Cost" can be misleading. While you don’t directly pay interest, the cost is often adjusted in the product price or covered by the merchant. In some cases, banks may also charge a processing fee of 1% to 3%.
E-commerce giants like Amazon, Flipkart, and retail stores offer No-Cost EMI in partnership with banks such as HDFC, SBI, and ICICI. However, before opting for it, carefully read the terms and conditions to avoid surprises.
✅ Advantages of No-Cost EMI✔ Easy Affordability: Helps in managing big expenses by breaking them into smaller payments.
✔ Quick Approval: Faster loan processing compared to traditional loans.
✔ Flexible Payment Options: Convenient repayment plans with minimal paperwork.
❌ Hidden Charges: Processing fees or inflated prices may nullify the No-Cost benefit.
❌ Impact on Credit Score: Missing EMI payments can lower your credit score.
❌ Encourages Unnecessary Spending: Since payments become easy, people may overspend on non-essential items.
No-Cost EMI can be beneficial for purchasing expensive products but only if you fully understand the terms & hidden charges. If unsure, consult your bank or a financial advisor before making a decision. Always assess your financial situation and needs to avoid unnecessary debt.
