Introduction
The world of technology has brought about a massive change in the way we live our lives. Electronic items such as smartphones, laptops, televisions and other appliances have become an essential part of our lives. However, these electronic gadgets often come with a hefty price tag, making it difficult for everyone to purchase them.
This is where the no-cost EMI scheme comes into play. In this article, we will discuss what no-cost EMI means, how it works and how one can use it to buy electronic items.
How Does a No-Cost EMI Loan Work?
A no-cost EMI loan is a type of loan that allows purchasing goods without having to pay any interest on the loan amount. When one opts for a no-cost EMI scheme, they can purchase the electronic item and pay the loan amount in equated monthly instalments (EMIs) over a specific period, usually ranging from 3 to 24 months. The loan amount is divided into equal monthly instalments, which you have to pay over the loan tenure.
For example, if one wants to buy no-cost EMI mobiles worth Rs 20,000 with a no-cost EMI scheme for 12 months, the amount will be divided into 12 equal instalments of Rs 1667 each. So, they will have to pay Rs1667 every month for 12 months without any interest charged on the loan amount.
When Should You Opt for a No-Cost EMI Loan?
The no-cost EMI scheme is an excellent option for those who cannot afford to pay the full amount upfront but want to purchase the latest electronic gadgets. It is especially useful for those who want to buy expensive electronic items such as mobile phones or other high-end devices without putting a strain on their finances.
However, it is essential to evaluate the financial situation before opting for these schemes such as the no-cost EMI scheme. It is important to remember that while you may not have to pay any interest on the loan amount, there may be other additional charges such as processing fees, prepayment charges and foreclosure charges that can increase the total cost of the loan. Additionally, failing to make timely payments of the EMIs can also have a negative impact on the credit score.
Therefore, it is crucial to understand the total cost of the loan, including all the additional charges, and evaluate your financial situation before opting for the no-cost EMI scheme. One should also make sure that one can afford the monthly EMI payments and does not miss any payments to avoid any negative impact on their credit score.
Does it Impact Your Credit Score?
A no-cost EMI scheme does not impact your credit score because the loan amount is not considered a debt. When one opts for a no-cost EMI scheme, they are essentially dividing the cost of the electronic item into EMIs without any interest charges. Therefore, the loan amount is not treated as a debt, and it doesn't affect their credit score. However, it's important to note that if one fails to make timely payments of the EMIs, it could negatively impact their credit score. Therefore, it's crucial to make timely payments to ensure a good credit score.
No-Cost EMI vs. Regular EMI
The difference between a no-cost EMI scheme and a regular EMI scheme is the presence of an interest component. With a regular EMI scheme, the loan amount is divided into EMIs, and the interest is charged on the loan amount. This means that one will end up paying more than the actual cost of the electronic item. On the other hand, with a no-cost EMI scheme, the loan amount is divided into EMIs without any interest charges, and one has to only pay the actual cost of the electronic item.
Additional Charges
While the no-cost EMI scheme may seem like an attractive option, it's important to note that there may be additional charges associated with it. These charges may include processing fees, prepayment charges and foreclosure charges. Processing fees are charged by the bank or the financial institution for processing the loan. Prepayment charges are charged if one wishes to make a prepayment or pay off the loan before the end of the loan tenure. Foreclosure charges are charged if one wishes to close the loan before the tenure that was agreed upon. It is essential to read the terms and conditions carefully and understand the total cost of the loan before opting for the scheme.
Conclusion
The no-cost EMI scheme is an excellent option for those who want to purchase electronic items without having to pay any interest on the loan. However, it is important to evaluate your financial situation and understand the additional charges associated with the scheme before opting for it. By doing so, one can make an informed decision and use the no-cost EMI scheme to buy electronic items without any financial strain.
Looking to buy a new mobile phone but can't afford to pay the full amount upfront? Opt for TATA Capital Consumer Loan to buy the latest no-cost EMI mobiles without any interest charges.
28 March 2023
5 mins read
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