You can afford paying the entire amount upfront. Some people can't, hence the option of EMI for them.
Even then some people find it costly and may not purchase, hence no-cost EMI. The discounted amount is already built into the products price.
If you can pay upfront, then purchasing on EMI has few drawbacks -
1. Processing fees
2. GST on monthly interest
3. No reward points for purchase.
So do cost-benefit analysis before choosing.
Thanks. Will look into these.
A point on cost-benefit analysis - At a high level
* Cash price - 46k
* 6 months EMI discount 7k
* Net price - 39k
* Processing Fee 500
* Net pay post EMI closure as per purchase slip - 39542
Am I missing anything
It’s fine only. What it does is add to the banks or nfcs loan books and pad the numbers. I get annoyed when the discount is there only on no cost emis and not full purchase
>I bought a LG product. 6 month no-cost CC EMI saved 8000 vs no discount on lump sum/cash payments
Can you explain this a bit more? What was the value of the product, what was the discount, EMI amount and term?
* Price of product if purchased on Cash or one time payment - 46k
* Discount on No cost 6 months EMI - 7k
* **Net price payable- 39k**
* Following was mentioned on credit card swipe slip
* Processing Fee + misc - 542
* **Net price payable post EMI - 39542**
Thanks for taking out time to explain.
I've just one query. Apart from the reward points ... Doesn't the 7k would have offset everything including GST/interest/processing fee?
Still if I had to do the exact calculations , how do I find out all components ?
You can afford paying the entire amount upfront. Some people can't, hence the option of EMI for them. Even then some people find it costly and may not purchase, hence no-cost EMI. The discounted amount is already built into the products price. If you can pay upfront, then purchasing on EMI has few drawbacks - 1. Processing fees 2. GST on monthly interest 3. No reward points for purchase. So do cost-benefit analysis before choosing.
Thanks. Will look into these. A point on cost-benefit analysis - At a high level * Cash price - 46k * 6 months EMI discount 7k * Net price - 39k * Processing Fee 500 * Net pay post EMI closure as per purchase slip - 39542 Am I missing anything
It’s fine only. What it does is add to the banks or nfcs loan books and pad the numbers. I get annoyed when the discount is there only on no cost emis and not full purchase
>I get annoyed when the discount is there only on no cost emis and not full purchase Exactly my point.
Read this https://www.reddit.com/r/IndiaInvestments/comments/eiuq3e/how\_zero\_cost\_emis\_work/
Well explained. Thanks for sharing
You won’t get the rewards in most cards. But if you pay on time, then yes it’s always better.
>I bought a LG product. 6 month no-cost CC EMI saved 8000 vs no discount on lump sum/cash payments Can you explain this a bit more? What was the value of the product, what was the discount, EMI amount and term?
* Price of product if purchased on Cash or one time payment - 46k * Discount on No cost 6 months EMI - 7k * **Net price payable- 39k** * Following was mentioned on credit card swipe slip * Processing Fee + misc - 542 * **Net price payable post EMI - 39542**
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Thanks for taking out time to explain. I've just one query. Apart from the reward points ... Doesn't the 7k would have offset everything including GST/interest/processing fee? Still if I had to do the exact calculations , how do I find out all components ?
The instant discount should be more than the processing fee + (interest rate * 1.18) to offset everything.