Recent statistics indicate that after a brief slump in EMI transactions during May 2020, the consumer-hunger has been reignited, with Indian consumers once again taking the EMI route to pay for consumables. Considering the fact that Samsung released its Galaxy S-series phones, while Apple also recently unveiled its iPhone 12 series models, smartphone users relied on their credit cards and EMI cards to divide the cost of the devices into monthly installments.
That said, one has to know about the finer details when it comes to EMIs. While on the surface, it looks like an excellent deal to convert the total cost into bite-sized monthly EMIs, EMIs come with additional fees. For instance, when you look at the interest rates offered by banks, it can range anywhere from 12 to 18 percent. Furthermore, you might have to pay a nominal processing fee if you’re using your credit card to pay for your new smartphone in EMIs, while you also have to diligently adhere to the monthly credit card bill payments.
With all that said, it is truly worth purchasing a new smartphone on EMIs? We answer that question by looking at the pros and cons of going the EMI route.
When should you opt to purchase a smartphone on EMIs?
Consumers can opt to purchase a product on equated monthly instalments (or EMIs) if they are unable, or don’t want to pay the cost of the product upfront. Instead of depleting one’s savings, or to offer greater convenience, banks and financial institutions let consumers purchase consumables on EMIs. If you want to purchase a smartphone that is relatively expensive, you can then divide the cost of the device, and pay for it in bite-sized instalments.
For instance, let us assume that you looked at an Oppo phone price, and thought it was too much to pay in one go. Whether it is a flagship model, such as the Oppo Find X2 which costs nearly Rs. 70,000, or a budget-friendly device such as the Oppo A53, you can convert the phone’s total cost into small EMIs. Oppo A53’s price today is nearly Rs. 12,500, but you can pay around Rs. 1,100 per month for 12 months, and purchase the smartphone.
What are the downsides of purchasing smartphones on EMIs?
It is commonly said that just because you can do something, does not mean you should. While purchasing any item on EMIs offers greater convenience, and lets you use the gadget while paying for it in small instalments, converting the price of the device into EMIs involves processing fees and interest rates. Depending on the bank, the interest rates can range from 12 percent to 18 percent. This takes the total cost of the device to more than the market price.
That’s not the only downside. If you fail to pay the monthly EMIs for whatever reason, you will incur penalty charges, while it will negatively impact your credit score. If you default on payments, you will face a lot of difficulties in the future if you try to procure loans, or want to apply for a new credit card. Last but not least, if you choose an 18 month or 24 month tenor, the depreciation rate of the device would mean that you would overpay for the smartphone by the end of the repayment period.
Verdict: To do or not to do?
In the end, the decision is yours to make. If you believe that you can pay monthly instalments without facing any issues, you can purchase a smartphone on EMIs. Furthermore, it is imperative that you check the interest rates, processing fees, and if you can buy the smartphone on No Cost EMIs. Certain cards, such as the Bajaj Finserv EMI Network Card let you divide the cost of the smartphone into No Cost EMIs, with zero interest rates, processing fees or hidden charges.
You can purchase your favourite smartphone from any of the top brands on the Bajaj Finserv EMI Store. Place the order, and get the device delivered to your doorstep within just 24 hours by shopping on the EMI Store.
