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What is a no-cost EMI offer on mobile phones? Read this

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In: Business


Even 3 decades back, if someone wanted to make a phone call, they looked for a phone booth or a PCO. Text messaging was unimaginable, and the thought that a tiny device could change the way of living was unthinkable.  Mobile phones were originally designed as an extension of the landline telephone, but there have been tremendous technological changes in the device over the years. 

The advancement in mobile phone technology has been so rapid that mobile phones have become an indispensable part of everybody’s daily lives. Similarly, there has been a rapid and steady shift in the payment methods of mobile phones, from cash to credit cards to no-cost EMIs.

Previously, credit cards were the most commonly used payment method among mobile users. However, nowadays, mobile phone users tend to turn to mobile payments more because of their convenience and ease of use.  Further, there is also a growing demand for no-cost EMI offers. 

What do you understand by no-cost EMI?

No-cost EMI is an easy repayment scheme offered by retailers and merchants for those who cannot afford to pay for the product in a lump sum or do not wish to spend a huge amount in one go. This scheme saves people from paying a hefty amount at once. 

In a no cost EMI phones scheme, borrowers can buy the mobile phone they desire and pay for that in easy monthly installments. For instance, the cost of the phone is Rs. 40,000, and the repayment tenure is ten months.

Buyers will not require to pay Rs. 40,000 at once. They can split the cost over ten months. It means they will have to pay Rs. 4,000 as a monthly installment. Now buyers might question if this option has no interest cost.  Yes, there are interest costs, which can be levied in two ways:

  • The discount on the product is eliminated

For example, say the phone cost is Rs. 44,000 and the total interest cost on the phone is Rs. 4,000. The sellers who usually offer discounts on products will eliminate the discount for the no-cost EMI buyers, and they will have to pay Rs. 44,000 instead of the discounted price. So, here suppose after the discount the cost of the phone is Rs. 40,000, but the no-cost EMI buyer will have to pay Rs. 44,000. Thus, Rs. 4,000 is the interest cost for the buyer.

  • The interest is added to the cost of the product

Suppose the phone price is Rs. 20,000 and the interest cost is Rs. 2,000; then, the price will be Rs. 22,000 for no-cost EMI phones buyers, thus adding the interest cost. Almost every bank lets consumers buy through this finance, and there are minimal to no processing fees.

Benefits of no-cost EMI option 

A few benefits of buying through a no-cost EMI option are:

  • It allows customers to purchase expensive or desirable items that they might not otherwise be able to afford.
  • No-cost EMI option lets consumers access the benefit of exchange offers too.
  • There is no requirement of making any down payment, like in loans. 
  • It also helps build the credit scores of individuals by taking loans of small amounts and paying the EMIs on time.

Limitations of no-cost EMI option 

A few limitations of the no-cost EMI option are:

  • This scheme is not available on all products and credit and debit cards.
  • Some items may have a processing fee, and banks may levy other applicable taxes on transactions.
  • Further, even if buyers return the product, they may lose the interest cost.


Purchasing a mobile phone on EMI might be a good option if a person does not have the cash to buy the phone. As the festival season commences, several online and offline stores start offering no-cost EMI on products such as mobile phones and electronic appliances. However, there are numerous things to look for before deciding. 

If individuals fail to repay an EMI on time, their credit score suffers. Understanding the terms and conditions is thus critical to making the most of the no-cost EMI phones. One must keep in mind that they always pay the item’s full price, plus any applicable taxes and other fees. While no-cost EMIs enable consumers to purchase things that would otherwise be expensive, it is critical that consumers do not go beyond and purchase products whose EMIs are unaffordable.

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