Personal loans have numerous benefits, and one of them is the no-cost EMI option. People who want to take a personal loan and still want to save some money can avail themselves of a no-cost EMI option. Many banks and NBFCs provide no-cost EMI options. Therefore, customers should look for products that have the no-cost EMI option and then purchase them.
An individual takes a personal loan from a financial organization to fulfill their requirements. People fulfilling the criteria of personal loans like employment record income and their repayment ability, etc., can apply for a personal loan. The personal loan amount that is sanctioned relies on a few factors. The CIBIL credit score, credit history, interest rate, repayment period, and capacity of the guarantor (if any) are some of them. A debt consolidation loan, emergency loan, travel loan, marriage loan are all types of personal loans borrowed from any financial institution by the debtor.
No cost EMI means that no cost will be charged on EMI on top of the payment of the product that a person purchases. No extra interest on the principal amount makes no-cost EMI one of the most demanded options nowadays. As per the Reserve Bank of India circular, creditors were not authorized to market consumer loans and EMI with zero interest rates. As a result, zero-cost EMI turned into a discount on product cost equivalent to the interest charge upon the product. When people purchase an article and choose a no-cost EMI, the total monthly installments to be paid are deducted from the product’s price.
At no cost EMI, the full cost of the product is to be spent, and mostly the monthly installments are reasonable. Almost for every expensive product a person purchases, the option of no-cost EMI is available. When the buyer realizes that the price of an article is too high for him to pay, he can take a no-cost EMI option.
When a person chooses a personal loan with no cost EMI the interest rates are still there but gets camouflaged and passed onto the customer in processing fees. And after the circular of RBI, the zero percent interest concept has become non-existent. Now, these schemes are used by financial institutions to allure and exploit vulnerable customers.
The schemes have now become a marketing gimmick, and some way or the other, customers are bound to bear the interest cost on the loan amount. And one way used to camouflage this cost is online shopping platforms where discounts are provided only when people pay the amount to the bank or financial institution. Another conventional method is to add the interest cost to the price of the product itself.
The lending institution generally charges GST on the interest amount, continuing as per the existing rates. But sometimes, banks pass on the interest to be charged as an upfront discount at the time of purchase of any product that provides the benefit of a no-cost EMI. But as previously said, this is just a mirage.
A Personal Loan Interest Calculator makes it easy to figure out the equated monthly installment on the loan a borrower has taken. The monthly installments a person needs to pay against a loan are crucial in deciding the loan amount and repayment period. To properly plan the loan, the prior calculation of the payout one needs to do every month is essential. If a person wishes to lower their monthly installment, they can reduce the loan amount or increase the repayment period.
To calculate the EMI against the personal loan, one can enter the principal amount of the loan; the interest rate agreed upon by the parties, the loan repayment tenure, and the monthly installment that one needs to pay to get instantly displayed. HDFC Personal Loan Customer Care or any other Bank or Financial Institution can help potential customers know their monthly installments before they apply for the loan. Maintaining a solid credit score and negotiating with the loan provider for a lower interest rate can also help a person get an economical loan.
Read More:- Why are Interest Rates high for Personal Loans?