When it comes to paying for large purchases, EMI (Equated Monthly Installments) and EMI conversion are becoming increasingly popular options. While these payment methods can seem like convenient solutions for high-ticket items, there are hidden costs associated with them that can quickly add up. In this blog post, we’ll explore the true cost of Instant EMIs and EMI conversion so you can make an informed decision about which payment option is best for you.
The convenience of EMIs
EMIs (Equated Monthly Installments) are a popular way to finance large purchases such as cars, furniture, and appliances. They provide consumers with the flexibility to spread out the cost of their purchase over a period of time without having to pay a large lump sum upfront. Consumers can opt for various repayment plans offered by different institutions and lenders. These plans offer consumers the convenience of paying back the debt in small, manageable chunks rather than all at once.
The EMIs are usually calculated based on factors such as the loan amount, the interest rate, and the number of months in which the loan is to be repaid. EMIs make it easier for consumers to manage their finances and to keep track of their debt. Furthermore, they also provide a sense of security since the payments are spread out over a longer period of time and are unlikely to cause a financial burden on the consumer.
In recent years, some institutions have started offering “instant EMIs” or “EMI conversion”, which allow consumers to immediately convert their purchases into EMIs at the point of sale. This feature provides consumers with greater convenience as they no longer need to wait until after the purchase to set up an EMI plan.
The cost of EMIs
When you’re considering taking out an EMI, you may think only about the price of the item or service you’re paying for and how much you’ll pay each month. But that isn’t the only cost to consider. EMIs also come with fees and interest charges that can add up over time.
The interest rate and fees vary between lenders and products, so it’s important to shop around and compare rates before signing up. Generally speaking, though, most EMIs include some form of interest. This is typically a flat fee based on the total amount of the loan, or an annual percentage rate (APR) that is added to your balance.
In addition to the interest, some lenders may also charge a processing fee that you’ll need to pay up front in order to take out the loan. This could be anywhere from 1-4% of the total loan amount, and it’s important to factor this into your budget when deciding whether or not to take out an EMI.
Finally, if you miss a payment or decide to cancel your EMI agreement, you may be subject to additional penalties or fees from the lender. These can be expensive and should be taken into consideration when signing up for an EMI.
By understanding the true cost of EMIs, you can make an informed decision about whether or not it’s the right option for you.
The true cost of instant EMIs and EMI conversion
Instant EMIs and EMI conversion can seem like a great way to make your purchase more affordable. Instead of paying the full cost upfront, you can spread the cost out over multiple months with an interest-free loan. Unfortunately, there are hidden costs associated with this option that you should be aware of before you commit to it.
The biggest cost associated with instant EMIs and EMI conversion is the convenience fee. This is usually a percentage of the total amount you’re borrowing, and it can range from 2-4%. That may not seem like much, but it can add up over time. Additionally, if you default on the loan or make late payments, you’ll incur additional fees and interest charges.
Furthermore, instant EMIs and EMI conversion don’t always offer the best terms when compared to other options. For example, if you use a credit card to purchase something, you might get a 0% introductory APR for the first few months. This means that you could pay no interest whatsoever for the period of the loan. With an EMI, however, you’re locked into a fixed interest rate regardless of how long it takes you to pay it off.
How to avoid the trap of instant EMIs and EMI conversion
If you want to avoid the potential pitfalls of instant EMIs and EMI conversion, there are a few simple steps you can take.First, read the fine print carefully before signing up for any form of EMI, particularly if it is an instant EMI or an EMI conversion. Make sure that you are aware of all of the associated costs and fees, as well as the potential risks.Second, be aware of the interest rates associated with EMIs and be sure to compare offers from multiple sources before settling on one. This will help ensure that you are getting the best possible deal.
Third, consider using a debit card instead of an EMI if you need to make a large purchase. Although the interest rate on a debit card may be slightly higher than an EMI, it does not come with the same associated risks and fees. Finally, always pay off your EMIs on time and in full. If you are unable to do this, then look into other payment options such as credit cards or personal loans. These can provide you with more flexibility when it comes to paying off your debt.
By following these tips, you can ensure that you are not caught in the trap of instant EMIs and EMI conversion. By understanding the associated costs and risks and making sure that you are getting the best deal possible, you can make sure that you are able to make your purchases without being burdened by large amounts of debt.