So I was curious about "no cost EMI" facility, and I have few questions that I would like to ask

[AmritSaroe]

So through my research I found out that it's not actually "no cost" the interest part is paid by the manufacturers and I will be charged a convenience fees and 18% GST on the total interest part of the MRP ( I didn't quite understand what's this charge is and why are they charging it ).

Few more questions:

1. So my research was based on Bajaj emi card card but I think most banks provide the same facilities so, i should apply for the Bajaj card or should I?
2. If the MRP doesn't change after choosing "no cost EMI" option then it's a good option as the charges will be really low as compared to the interests that credit card companies charges. Is that right?

 

[SHREYA BASENE]

As far as i know, GST is the only tax that business owners/shopkeepers etc. can not escape from. it is mandatory to pay GST to government for them. so they earn these from customers and pay it to the government. So the 18% GST charged on your NO COST EMI is directly charged by whoever you are buying your commodity from.

 

[T€ja]

OK recently I also encountered with the same confusion of what's a no cost emi is bolke


I will share a story guess it helps in better understanding



I bought a 40k tab from flipkart
After icici card instant discount it came to 36k
Then I chose no cost emi and chose 12 months plan, so now I was shown I'm getting this product for 32k only I was shocked, and thought to be some glitch and quickly bought it



But later did I realise is that u can't escape from banks interest rate for an emi never ever, so flipkart decreased its own price to 32k, so by the end of the 12 month period, u will be paying 36k with interest, so flipkart pays for u not the bank. Hence I finally got it for the original 36k only



But I would still say if u r willing to pay the loan processing fee of 200 and some gst charges for the loan like below 100, any minimal bank charges.


Then I guess no cost emi is a very good option go for it


Correct me if I'm wrong anywhere

 

[kyj]

OK recently I also encountered with the same confusion of what's a no cost emi is bolke


I will share a story guess it helps in better understanding



I bought a 40k tab from flipkart
After icici card instant discount it came to 36k
Then I chose no cost emi and chose 12 months plan, so now I was shown I'm getting this product for 32k only I was shocked, and thought to be some glitch and quickly bought it



But later did I realise is that u can't escape from banks interest rate for an emi never ever, so flipkart decreased its own price to 32k, so by the end of the 12 month period, u will be paying 36k with interest, so flipkart pays for u not the bank. Hence I finally got it for the original 36k only



But I would still say if u r willing to pay the loan processing fee of 200 and some gst charges for the loan like below 100, any minimal bank charges.


Then I guess no cost emi is a very good option go for it


Correct me if I'm wrong anywhere

U r almost correct but.
u paid GST in your interest amount which is something 720rs now it cost u something 36938rs including all type of charges,fee and also taxes

 

[T€ja]

U r almost correct but.
u paid GST in your interest amount which is something 720rs now it cost u something 36938rs including all type of charges,fee and also taxes

I don't know on what exactly they charged the GST on bro but it was like 100 rupees only, Ive attached my statement, check if it helps

 

[shashwat]

It's irrelevant. There's a term called "reduced principal". If you want to buy an item for Rs. 40,000, in no-cost EMI schemes, you should only need to pay 40,000. The break-up works something like this:

40,000 = Principal + Interest + Proc-Fee + GST

So, basis this, they recalculate your Principal (hence reduced principal).

So, it might look like the following:

Principal = 35,000
Interest = 4,200 (12% over 12 months)
Proc-Fee = 700 (2%)
GST = 100 (18% on Proc Fee)

Total = 35,000 + 4,200 + 700 + 100 = 40,000

EMI = 3,334 per month for 12 months

You still have to pay only 40,000 at the end. You don't need to worry about GST or Proc-Fee.

At least, that's how it should work.

Adding to this, the only one "losing" money here is the merchant, because they are selling their item at 35,000 instead of 40,000. They are fine with that, because if they didn't, then many people wouldn't buy. This "discount" of 5,000 that they give in the case of EMIs is called "subvention", and is between the lender and the merchant.

 

[Skylar]

It's irrelevant. There's a term called "reduced principal". If you want to buy an item for Rs. 40,000, in no-cost EMI schemes, you should only need to pay 40,000. The break-up works something like this:

40,000 = Principal + Interest + Proc-Fee + GST

So, basis this, they recalculate your Principal (hence reduced principal).

So, it might look like the following:

Principal = 35,000
Interest = 4,200 (12% over 12 months)
Proc-Fee = 700 (2%)
GST = 100 (18% on Proc Fee)

Total = 35,000 + 4,200 + 700 + 100 = 40,000

EMI = 3,334 per month for 12 months

You still have to pay only 40,000 at the end. You don't need to worry about GST or Proc-Fee.

At least, that's how it should work.

Adding to this, the only one "losing" money here is the merchant, because they are selling their item at 35,000 instead of 40,000. They are fine with that, because if they didn't, then many people wouldn't buy. This "discount" of 5,000 that they give in the case of EMIs is called "subvention", and is between the lender and the merchant.

Not a genuine calculation. Principle is 36k with charges it won't cross 37k as bank is charging interest on 32k purchase value.