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Showing posts from October, 2019

The Truth about No Cost EMIs

Open up any e-commerce website and you’ll be bombarded with No Cost EMI offers. On the surface it seems like the merchants and the banks have tied up to help you buy your favourite products on installments, without paying interests. But this is far from the truth. They will trick you into believing you are buying the product at 0% interest but you'll end paying more than the original price. Just as there's no such thing as a free lunch, similarly there is no such thing as a No Cost EMI. It’s all just predatory marketing. Let me explain with an example. First off let me tell you, according to RBI's regulations a lender cannot lend money on 0% interest. So banks use different tactics to make it seem like the effective interest rate is 0%. Now let's assume you want to buy a product worth ₹3599. If you bought it using regular EMIs, the bank will charge you ₹133 as interest. So the effective price would be ₹3732. Now if you opt for the No Cost EMI scheme, the merch