No cost emi: Nowadays when you book a mobile phone, fridge or holidays, the option of no-cost EMI is visible to everyone. This facility of paying in installments without interest attracts people a lot. This has become the easiest way for youth and first credits to take credit. Is it really no-cost EMI free? Will customers not have to repay interest?
Is there really no-cost EMI free?
Hearing the name of no-cost EMI, it seems that it does not cost any extra, but the reality is a bit different. In this scheme, the burden of interest is not directly put on the customer, rather it is added to the price of the product or the shopkeeper, manufacturing company or finance company gives it as subsidy. For example, if a mobile phone is getting ₹ 15,000, then in No-Cost EMI, its price is already increased to Rs ₹ 16,000 so that interest can be compensated.
Helps in making credit score
If you pay EMI on time, it helps improve your credit score. Especially for those who do not have credit history, there is a good option to show their payment behavior.
Be mindful of these things..
But if you have taken many no-cost EMI schemes together, then your credit report will show that you have many open loan accounts. If your income is not worth handling all these loans, it can affect your credit qualification.
Not only this, if you do not fill a single EMI on time, then it can have a bad impact on your credit report. Suppose someone has three loans – mobile, TV and home loan – and if they forget to repay the EMI of the mobile, then it will be seen as 3 out of 1 loan default in the report, which can make a credit score.
Every time you take a no-cost EMI, the bank checks your credit score, called a hard inquiry. The score is affected even if this happens again and again.
Balance is necessary
Credit increases conjugation and no-cost EMI helps a lot. If there is no credit facility, many people are unable to buy expensive goods. But taking excess EMI can make more burden than income. Therefore, a good rule can be that your total EMI amount is according to your income and keep checking your credit score from time to time. With this you will be able to balance financial life.
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