Wellcome to JK STUDY ALERTS. Today in this post I will tell you, What is EMI, how it works, Advantages, Drawbacks and How you can buy products on EMI both online Amazon, Flipkart etc and from offline stores which give products on EMI. Read all details given on post so you can clear all your doubts about EMI.
What is EMI?
EMI stands for Equated Monthly Installment, which is a fixed amount of money that you need to pay every month to the lender until the loan amount is fully repaid. EMI is a form of loan repayment and is commonly used for purchases such as consumer durables, electronic gadgets, furniture, and even houses and cars.
When you purchase a product or service that comes with a price tag, you have two options – either pay the entire amount upfront or pay in installments over a specified period. If you choose the latter, you will be required to pay equated monthly installments or EMI. In this article, we will discuss EMI in detail, including what it is, how it works, and the benefits and drawbacks of using this payment method.
When you choose to make a purchase through EMI, you essentially take a loan from the lender, who charges interest on the loan amount. The interest rate can vary depending on the lender, the product or service being purchased, and the duration of the loan. The loan amount is then divided into equated monthly installments, which include both the principal amount and the interest charged.
The duration of the EMI repayment period can also vary, ranging from a few months to several years, depending on the size of the loan and the borrower’s repayment capacity. Longer repayment periods typically result in lower EMI amounts but may also result in higher overall interest charges.
Advantages of EMI.
EMI, or equated monthly installment, is a payment method that allows you to pay for a product or service in installments rather than paying the entire amount upfront. EMI has gained popularity over the years, and many consumers are now choosing this payment method to manage their finances. In this article, we will discuss the advantages of using EMI to make purchases.
- Affordable Repayment
One of the main advantages of EMI is that it allows you to make large purchases without having to pay a significant amount upfront. With EMI, you can spread the payments over a period of time, making it easier for you to manage your finances. This means you can buy a product or service that you might not be able to afford otherwise.
- No Need for Large Amount of Savings
EMI eliminates the need for a large amount of savings to make a purchase. Instead of waiting for months or years to save enough money to make a purchase, you can opt for EMI and pay for the product or service in installments. This means you can buy the product or service you need immediately and pay for it over time.
- Interest Rates
EMI comes with an interest rate, which can be a disadvantage, but it can also be an advantage. Some lenders offer EMI at low-interest rates, which can make it an attractive payment option. This means you can pay for the product or service at a lower cost than you would if you paid the entire amount upfront.
EMI offers a flexible repayment period, which means you can choose the repayment period that suits your financial situation. The repayment period can vary from a few months to several years, depending on the product or service being purchased and the lender. This means you can choose a repayment period that fits your budget.
- Builds Credit Score
If you make EMI payments on time, it can help build your credit score. A good credit score can be useful when applying for loans or credit cards in the future. EMI payments show that you are responsible and can manage your finances well, which can be viewed positively by lenders.
EMI is an attractive payment option for those who want to buy products or services without having to pay a large amount upfront. It offers flexibility, affordability, and can help build your credit score. However, it’s important to carefully consider the interest rates and repayment period before choosing to use EMI. With proper planning and budgeting, EMI can be an effective tool to help you achieve your financial goals.
How to products on EMI?
EMI, or equated monthly installment, is a payment method that allows you to pay for a product or service in installments rather than paying the entire amount upfront. Many consumers opt for EMI to manage their finances and make purchases they may not be able to afford otherwise. In this article, we will discuss how to buy products on EMI.
1. Choose the Right Lender
The first step to buying products on EMI is to choose the right lender. You can opt for EMI with banks, non-banking financial companies (NBFCs), or the merchant itself. It’s important to compare the interest rates and repayment period offered by different lenders before making a decision. You can also check if the lender has any special offers or discounts that you can take advantage of.
2. Check Eligibility
Once you have chosen the lender, you need to check if you are eligible for EMI. The eligibility criteria can vary depending on the lender, but generally, you need to have a good credit score and a stable income source. Some lenders may also require you to provide proof of income and identity.
3. Choose the Product
After checking your eligibility, you need to choose the product you want to buy. You can buy a wide range of products on EMI, including electronic gadgets, furniture, home appliances, and even cars and houses. Check if the product you want to buy is eligible for EMI and the repayment period offered by the lender.
4. Apply for EMI
Once you have chosen the product and lender, you need to apply for EMI. You can do this online or visit the lender’s branch to apply. Fill out the application form and provide the required documents, such as proof of income and identity.
5. Pay the Down Payment
Most lenders require you to pay a down payment before buying the product on EMI. The down payment can range from 10% to 50% of the product’s price, depending on the lender and the product. Once you have paid the down payment, you can take possession of the product.
Make EMI Payments
Finally, you need to make EMI payments as per the repayment schedule. The lender will provide you with a repayment schedule that includes the EMI amount, interest rate, and repayment period. It’s important to make the payments on time to avoid penalty charges and negatively impacting your credit score.
Buying products on EMI is a convenient way to manage your finances and make purchases you may not be able to afford otherwise. However, it’s important to choose the right lender, check eligibility, and carefully consider the interest rates and repayment period before opting for EMI. With proper planning and budgeting, EMI can be an effective tool to help you achieve your financial goals.
Drawbacks of EMI.
While EMI, or equated monthly installment, can be an attractive payment option for those who want to buy products or services without having to pay a large amount upfront, it also comes with some drawbacks. One of the main drawbacks of EMI is the interest rate, which can add up to a significant amount over time. This means that you could end up paying more for the product or service than you would if you paid the entire amount upfront. Additionally, missing EMI payments can negatively impact your credit score and result in penalty charges. It’s also important to carefully consider the repayment period before opting for EMI, as a longer repayment period can result in paying more interest. Overall, while EMI can be a convenient payment option, it’s important to carefully consider the drawbacks before making a decision.
No EMI cost is a payment option offered by some lenders that allows you to buy a product or service without having to pay any interest on the EMI. Essentially, you only pay the cost of the product or service in equal monthly installments, with no additional interest charges. However, it’s important to note that while you may not be paying any interest on the EMI, the lender may include other charges, such as processing fees or prepayment penalties, which could add up to a significant amount over time. Additionally, no EMI cost may only be available for a limited time or on specific products, so it’s important to check the terms and conditions before opting for this payment option.