No-cost EMI: a loan that is portrayed as free
A ₹60,000 phone, 6 easy instalments of ₹10,000, no interest. It feels as if the shopkeeper has done you a favour. He has not. Nobody lends money for free and nobody sells at a loss. Someone pays.
Account subscription benefits alongside Premium Stories, Editorials, Opinions and more.
Unlock these with Subscription
The View From India Looking at World Affairs from the Indian perspective.
First Day First Show News and reviews from the world of cinema and streaming.
Today's Cache Your download of the top 5 technology stories of the day.
Science For All The weekly newsletter from science writers takes the jargon out of science and puts the fun in!
Data Point Decoding the headlines with facts, figures, and numbers
THEdge At the cutting edge of education and careers
Health Matters Ramya Kannan writes to you on getting to good health, and staying there
Gender Agenda Stories from beyond the binary.
The Hindu On Books Books of the week, reviews, excerpts, new titles and features.
Every festive season, the same board greets you at the electronics shop: “No-cost EMI”.
TVs, washing machines and appliances are available at no-cost EMI.
A ₹60,000 phone, 6 easy instalments of ₹10,000, no interest.
It feels as if the shopkeeper has done you a favour.
He has not.
Nobody lends money for free and nobody sells at a loss.
Someone pays.
Lets see who.
A bank or finance firm funds the purchase and charges interest.
The shop agrees to bear interest but it will recover it in one of two ways.
Either the price quoted to you is higher, or you lose the discount a cash buyer would have got Take the same phone.
A cash buyer gets it for ₹57,000.
The EMI buyer pays ₹60,000.
The ₹3,000 gap is the interest.
economy, business and finance / economy (general)
Terms & conditions | Institutional Subscriber
Comments have to be in English, and in full sentences.
They cannot be abusive or personal.
Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform.
If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles.
If you do not have an account please register and login to post comments.
Users can access their older comments by logging into their accounts on Vuukle.
Full detailed coverage is shown on the council website above. Source attribution: The Hindu – Business.
Back to all council news
