Learn about What is EMI and No Cost EMI?

What is EMI and No Cost EMI

In today’s world, people are more attracted in buying things on EMI, where they may settle their amounts later through monthly installments. Paying money in small portions helps the individual to balance their budget and other expenses.  

However, before paying the sum, one needs to understand the differences between EMI and No-cost EMI by considering their pros and cons.  

What is an EMI?  

Equated monthly installment is shortly known as EMI. It is a method through which the borrower pays a fixed amount to the lender at the end of each month to repay their personal loan or debt. For example, to buy a phone on EMI with a debit card, the entire cost can be paid in monthly installments.  

EMI is considered one of the popular repayment methods that calculates both the interest and the principal portions. Towards the end of the last payment, the individual can get a Non-objection Certificate (NOC) from their lender to close their EMI.  

What is No Cost EMI?

No-cost EMI is where the individual purchases a product such as a no-cost EMI bike and pays the amount through monthly installments with no additional charges beyond the purchased price.

No-cost EMI, often known as zero-cost / interest-free EMI, has grown increasingly popular in both online and offline retailers.   

Factors to Consider while Looking at No Cost EMI

Budget: Calculate the total amount of cost that needs to be paid at the end of every month to align with your budget. Check whether the scheme includes any penalties for delayed payments.  

Also Read: 

What is Prepayment Penalty in Personal loan? 

Understanding refund procedure: If you are not able to pay the monthly installments, you may have to return the product to your lender. It may take days based on the lender’s policies. 

Timely payments: You need to pay the amount within the given time frame to avoid issues with your credit score. Late payments may reduce your credit score and decline your opportunities to get future loans. 

Difference between EMI and No Cost EMI 

1. Additional expenses, such as interest and principal, are included. There are no additional fees included.  
2. Credit card companies and banks offer EMI.  No-cost EMI is Offered by NBFCs like Bajaj  Finserv  
3. The product’s total price may include additional charges which differ from MRP.  The overall cost of the goods acquired through no-cost EMI is comparable to its MRP.  

Pros and Cons of No Cost EMI 

S.No Pros  Cons 
1. Customers can get premium and luxurious products without having to pay the full price.   All products are bought under no-cost EMI. Therefore there are few restrictions for some products to be acquired through no-cost EMI payment. 
2. Credit cards are not required during the payment process.  Some institutions offer no-cost EMI tied to specific credit cards which limits the accessibility for others.  
3. It is Budget-friendly as it reduces the amount into smaller parts. This helps the individual to enjoy their other necessary expenses without any sacrifices.  Some financial companies may ask for processing fees which at times may be included in the product cost itself.  

Important documents that are required to get a payment through no-cost EMI includes: 

  • Identity Proof: Identity provided by the government such as an Aadhar card, license, or passport is required. It is possible to get mobile EMI on an Aadhar card
  • Address proof: Any document that verifies your current address such as utility/rental bills should be provided. 
  • Income proof: Documents like bank statements, and salary slips should be provided to ensure your EMI payment.

Eligibility criteria 

  • Income: The individual should have a regular source of income. 
  • Age: 21 to 65 years  
  • A good credit score above 720 is a must. 

People’s consumption changes frequently, and no-cost EMI is considered as one of the most flexible ways through which long-term payments can be made easily.  

But the decision is up to the individual to choose their flexible mode of payment considering its pros and cons.   


Which payment method can I use to get a no-cost EMI?  

No-cost EMI is available on credit cards from all major banks which include AXIS, ICICI, HDFC, SBI, Kotak, 

 Induslnd etc.  

Is no-cost EMI available on all online stores? 

The no-cost EMI is available only on selected products from different online stores sold by specific sellers. 

Is no-cost EMI interest-free?  

Yes, No-cost EMI is interest-free, but some financial companies may include a processing fee.  

Is no-cost EMI a good option for customers?  

It is indeed considered a good option for customers who wish to purchase without interest.  

Hariharan Ravichandran

Understanding the ever-changing environment of money may be a difficult experience.I'm Hariharan, a seasoned finance explorer and blogger. I am right there with you, beginning on this journey of financial enlightenment as a fellow traveler.


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