Home / Money / Personal Finance /  Zero-cost EMIs have hidden charges you’ll end up paying

Buying a big-ticket item can become a financial burden if you don’t plan ahead. A seemingly good solution to buying big-ticket items without a huge financial setback is by purchasing the item on credit and paying equated monthly instalments (EMIs). What makes this proposition even more attractive are the ads that scream zero-cost EMIs.

While buying something on EMI and not paying any interest sounds tempting, no-cost EMIs are often a marketing gimmick. The seller will always look to pass on a portion if not all of the interest burden to the buyer in some form or the other. There are two ways sellers accomplish this.

The first is they don’t give the discount you would have got had you paid the full price upfront. Instead they tie up with a bank or financial institution for such offers and pay them the margin to cover the interest cost. The second tactic is to add the interest cost to the price of the product and then offer a no-cost EMI. Often the offer is enough to lure customers, who tend to ignore the inflated price.

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