Is no-cost EMI free?
The real cost of a no-cost EMI, once you count the discount you give up, the fee and GST.
Where the cost hides
A no-cost EMI usually works by giving you a discount equal to the interest, so you pay the same price in instalments. But you may lose a cash or bank-offer discount, pay a processing fee with GST, and pay GST on the interest part of each EMI. Together these can make a no-cost EMI cost more than paying upfront.
How to use it
- Enter the price on EMI and the number of months.
- Add any discount you would get by paying in full, and the processing fee.
- See the real yearly interest rate you are paying.
Questions.
Is no-cost EMI really interest-free?
Sometimes close, but often not. Lost discounts, processing fees and GST on interest add a cost that the word no-cost hides.
Is GST charged on card EMI interest?
Card issuers generally charge 18% GST on the interest part of card EMIs. Check your card statement or the issuer's terms.
When is no-cost EMI a good idea?
When there is no fee, you are not giving up any discount, and spreading the payment genuinely helps your budget.
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