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Easy credit is the new buzz phrase in the consumer market. With online lending platforms as well as banks through their credit cards offering deferred payment options, people are becoming more inclined to borrowing for discretionary expenses. E-commerce sites Flipkart and Amazon have also joined the bandwagon with their deferred and staggered payment solutions. With the festive sales of both platforms just a few days away, there is renewed focus on these facilities. Here’s what you need to know.
Flipkart offers a credit borrowing solution for customers, named Flipkart Pay Later, which allows select customers to check out items without entering any payment details. They can then defer the payment till the following months. According to Flipkart, this is also supposed to offer convenience to busy buyers who might not want to go through the two-step authentication process or have cash ready for Cash on Delivery (COD) when the delivery arrives. There are no interest charges involved, and the buyer can either choose to convert the check-out amount into 3 to 12 month EMIs, with EMIs being interest free up to 3 months, or opt for Pay Later, which gives them a window of 10-40 days to clear the payment.
Amazon also has a similar payment solution, Amazon Pay EMI, which makes credit easily available for shopping on the site. The e-commerce giant has partnered with CapFloat Financial Services Private Limited, an NBFC registered with RBI, to offer Amazon Pay EMI. Amazon’s website states that Capital Float is listed in RBI's list of scheduled NBFCs and is permitted to lend money to retail customers, small and medium businesses. You need to provide you PAN to register and can check the approved EMI limit you are eligible for after you complete the process. This amount varies from customer to customer, and the EMIs are only interest free if the website is running a No-cost EMI offer at the time.
However, the convenience of easy credit can be a dangerous temptation. Without the hassle of entering payment details, buying is a one-click activity, which can make it a mindless one for many customers. If you have ever added things to your online shopping cart, only to eliminate them at the payment stage, this could mean losing out on that opportunity to rethink a purchase. According to Shilpi Johri, certified financial planner and founder of Arthashastra Consulting, discipline is key if you want to make the most of these facilities. “Shopping online means that your are already less inhibited about how much to spend. Having an easy credit option available just makes it that much more tempting, and you might end up buying something you don’t need or can’t afford,” she said.
Johri recommends being mindful of what you want to buy, and making a note of the item and price before you use a deferred or staggered payment option. “It can be a useful tool for big-ticket purchases if you don’t want to pay for it upfront. But make sure your inflows will be enough to pay it off in time,” she said.
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