EMI schemes for white goods: Here's how they work
It allows purchasing what we cannot afford in the immediate present and converting our 'wants' into 'needs'.
These days, it is common for customers to opt for Equated Monthly Installments (EMIs) in order to buy any sort of consumer durable product. Especially in India, it is very popular to buy white goods and mobile phones through EMI schemes as it is a boon for those who are depending on a steady source of income. It allows purchasing what we cannot afford in the immediate present and converting our 'wants' into 'needs'. EMI scheme means instead of paying lump sum payments at a time, you can divide the amount into several small chunks that will fit into your pocket. That's why customers prefer to pay for a product with the help of an EMI option. To brief you more on the advantages of EMI schemes, we have prepared a list of points below:
•Affordability: With the help of EMIs, consumers can have the freedom to afford such things for which they are not in a position to make full payments at a time. These schemes give consumers an opportunity to make payments in installments, thus allowing them to buy any consumer durable product without making a hole in their pockets. In addition, if you are a credit card holder, you must be aware with the fact that opting for an EMI option to buy any consumer durable goods is undoubtedly a wise move rather than making a complete payment through it at a time. The EMI mode of purchase makes many white goods accessible.
•Flexibility: An EMI scheme comes with flexibility option, wherein consumer can decide the amount that he/she can afford to pay in installments. Consumers can decide the amount and duration for any good, depending upon their financial situation and income. With flexible repayment options, one can easily pay the outstanding balance without any worry.
Let's try to understand this thing with the help of an example below.
Suppose you want to buy an iphone worth Rs.80,000, but can't afford to pay the full amount at a time. Then what will you do? Here comes an EMI scheme that allows you to buy your favorite product with easy monthly installments and flexible repayment options. Based on rate of interest and tenure, you can calculate the EMI payable on the loan before buying the product. It will, thus assure you of the payout amount that you need to be ready with.
Amount: Rs.80, 000
Rate of Interest: 11.49%-24% p.a.
Tenure: 3 Years
Below is the table showing EMI of same amount for different tenure:
Rs. 3,747- 4,230
•Quantum of finance: If you opt for an EMI option, there are many lenders that offer you up to 100% funding so that you can easily buy your favorite product. Yes, you can avail complete finance of any consumer durable goods that you want to buy as various lenders will be more than happy to offer you the same. However, there are few lenders who give you upto 80%-90% of funding, depending upon your eligibility, thus it varies from lender to lender. So it’s always advisable to check this thing with your lender, before you opt for an EMI option to purchase any consumer durable item.
•Absence of a middleman: If you make a purchase of your favorite product via EMI, the amount directly reaches to the lender as there is no middleman involved. You can be rest assured because you don't have to face any hassles of a middleman. With the help of this, there is no need to pay some extra bucks to a person/agent claiming to help in financing a product for you. Now, with no costing of middleman involved, you can save a lot of money and can enjoy buying a consumer durable goods without any hassle.
•EMI count reduces via savings: You can save further with the EMI option if you have accumulated savings over the years. The savings can be used to lower the down payment on your product purchase, thus shortening the number of EMIs. For example: An iphone worth Rs. 80,000 has come to the market. There are two EMIs options to avail this product that is explained below.
Option 1: To buy this product, you will require making a down payment of Rs.10, 000. The rest Rs.70, 000 will have to be absorbed via EMI, which comes out to be Rs.2, 308-2,746 at an interest ranging between 11.495-24% p.a.
Option 2: Whereas, if you have the saving of say Rs.30, 000, you have to pay an EMI of Rs.1, 649-1,962 on remaining outstanding balance i.e. Rs.50, 000 with the rate of interest mentioned above.
Below is the table showing EMI payout via different scheme options:
EMI Scheme Options
EMI funded purchases though look attractive, one must be careful with repayment of the credit availed. Pay your EMI as per the agreed schedule and build your credit score. If you fail to repay as per the time line, your credit score will go for a toss which in turn will make you ineligible for future loans.