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A Detail Understanding Of No-Cost EMI

In the world of consumerism, the desire to own high-value items often clashes with the financial constraints faced by individuals. The introduction of innovative financing schemes like ‘No-Cost EMI’ has emerged as a game-changer, offering a pathway for shoppers to acquire pricey items without the burden of hefty upfront payments. This article delves into the intricacies of No-Cost EMI, comparing it with the conventional Regular EMI, and sheds light on its benefits and drawbacks. 

Understanding No-Cost EMI 

No-cost EMI stands as a beacon of financial accessibility, allowing individuals to break down the cost of a product into affordable monthly instalments without incurring additional interest charges. Unlike Regular EMI plans that often come with interest rates above 5%, No-Cost EMI plans offer a 0% interest rate, making it an attractive proposition for budget-conscious consumers. 

Read: Flat Vs Reducing Interest Rates

In a Regular EMI scenario, the total cost includes both the product price and the accrued interest, resulting in a higher overall expenditure. On the contrary, No-Cost EMI plans ensure that you only pay the product price over the chosen tenure, providing financial relief without compromising on your desired purchase. 

Comparing Regular EMI and No-Cost EMI 

Let’s unravel the differences between Regular EMI and No-Cost EMI using a simple example: 

Consider a smartphone with a price tag of Rs. 20,000. With a Regular EMI plan over 6 months and an assumed interest rate of 10%, the total cost becomes Rs. 21,000, leading to a monthly EMI of Rs. 3,500.  

In contrast, a No-Cost EMI plan may offer a discount of Rs. 1,000 on the smartphone, making the effective cost Rs. 19,000. The monthly EMI for No-Cost EMI would then be Rs. 3,166.67, significantly lower than the Regular EMI. 

Advantages and Disadvantages: 


  1. No Additional Charges: No-Cost EMI plans spare consumers from additional charges such as interest or processing fees, ensuring transparency in financial transactions. 
  2. Affordability: By converting the cost into interest-free EMIs, No-Cost EMI plans make high-value purchases more accessible and manageable for individuals with budget constraints. 
  3. Flexible Options: No-Cost EMI plans are widely available across various platforms, providing flexibility regardless of the bank or card type, and catering to diverse personal needs. 
  4. Versatile Usage: These plans can be utilised for various purposes, including celebrations, education expenses, and more. 


  • Higher Overall Cost: Regular EMI plans may result in a higher overall cost due to added interest, which could discourage some customers. 
  • Limited Discounts: Discounts or cashback offered with No-Cost EMI plans may be lower than potential interest charges, and these options may not be available for all products. 
  • Customer Preferences: Some customers may prefer upfront discounts instead of No-Cost EMI, impacting the attractiveness of the scheme. 

Credit Card Usage in No-Cost EMI 

Both Regular EMI and No-Cost EMI plans deduct the purchase amount from the credit limit. However, in the case of No-Cost EMI, it deducts the discounted product cost, preserving more of the credit limit for other transactions. 

Comparison Summary: Regular EMI vs. No-Cost EMITop of Form 

Aspect  Regular EMI  No-Cost EMI 
Product Cost  Same  Same 
Interest Rate  above 5% most of the cases   0% 
Total Cost  (Product + Interest)  Product 
Monthly EMI Amount  (Product cost + Interest) divided by Months  Product cost divided by Months (No Interest) 
Advantages  ·        Allows spreading the cost over time.  ·        No additional charges (interest or processing fees).  
·        Quick access to the product.  ·        Affordability with interest-free payments.    
·        Helps build credit.  ·        Flexible options across various platforms.  Versatile usage for personal needs. 
Disadvantages  ·        Higher overall cost due to added interest.  ·        Discounts or cashback may be lower than potential interest charges.  
·        May discourage some customers due to interest charges.  ·        No-Cost EMI options may not be available for all products.  
   ·        Some customers may prefer upfront discounts instead of No-Cost EMI. 
Credit Card Usage  Deducts from credit limit for the full product cost.  Deducts from credit limit for the discounted product cost. 


There are a few different ways through which one can take advantage of no-cost EMI: 

  1. Make a fixed deposit and use the interest income to offset the EMI payments: This is a good option for customers who have the cash on hand to make the fixed deposit and who are comfortable with the risk of locking up their funds for a period of time.
  2. Use a credit card that offers no-cost EMI: Many credit cards offer no-cost EMI options on purchases made at certain retailers or on specific categories of goods.
  3. Take out a personal loan with a no-cost EMI option: Personal loans can be used to finance a variety of purchases, including electronics, furniture, and appliances. Some lenders offer no-cost EMI options on personal loans, which can be a good way to spread out the payments over time.
  4. Utilize a cashback credit card for no-cost EMI: If you have a cashback credit card, you can use the cashback rewards to offset the cost of the EMI payments. This can effectively reduce the overall cost of the purchase.
  5. Negotiate with the retailer for a no-cost EMI option: In some cases, you may be able to negotiate with the retailer for a no-cost EMI option, even if they don’t typically offer it. This is more likely to be successful if you are a good customer and have a history of making on-time payments. 

When deciding between no-cost EMI and other payment options, consider your budget to ensure monthly instalments align with your financial situation. Evaluate if the additional cost of no-cost EMI justifies the product’s value. Compare with upfront discounts or lower-interest EMI plans for a well-informed choice. This ensures a financially prudent decision aligned with your goals.

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