As E-commerce websites offering great discounts 24×7×365. Thus, the buying behavior has lifted towards becoming more spontaneous than ever. Besides this, the continual bombardment of notifications also encourages customers to buy at the heavily discounted price. Apart from this, there’s one more scheme that uplifts this shopping scenario, is the No Cost EMI. It has gained huge popularity in recent years. But still many people have a doubt regarding this scheme. So here we will discuss the meaning of No Cost EMI, its benefits, and how it works.

Moreover, the other name for No Cost EMI is Zero Cost EMI. As it seems that it is interest-free. But is this really true? Does it charge any interest? Is this really a profitable deal or a smart trick? Let’s find out. Well, it is one of the schemes that make shopping much easier and convenient for everyone. Many times, you hear that someone is happily buying a smartphone or any other electronic device using the Zero Cost EMI offer. Although, the meaning of No Cost EMI is not just a lucrative way for shoppers to purchase expensive products. It is more than that.

Meaning of No Cost EMI

Do you really familiar with the meaning of No Cost EMI offer? If still any doubts left, then you are in the right place. Here you will know everything about this offer. The No-Cost EMI scheme allows shoppers to buy expensive items that are unaffordable for them. Flipkart introduced this scheme for the first time. Further other e-commerce platforms like Amazon join this offer. It will help buyers to purchase high-value items online through EMIs, thereby reducing the burden of paying a huge amount upfront.

Furthermore, No Cost EMI is a finance scheme provided by merchants and retailers. Using this offer you pay only the product price in EMIs spread over your repayment timeline. Usually, people think that it’s interest-free. But it’s not. It involves interest payments.

The meaning of Zero-Cost EMI is one can use this offer to buy costly items if he's not able to make a direct payment.

For instance, if you buy a product of Rs.21,000 at a 3-month no-cost EMI. Then you have to pay Rs.7,000 each month for 3-months to your EMI provider. This will be a total of Rs.21,000 at the end of 3-months with zero interest cost. Even you can buy holidays and flight tickets on EMI with ease.

According to the circular released by the Reserve Bank of India (RBI), in 2013, the concept of zero percent interest is not valid. Therefore, it clearly shows that banks cannot possibly give interest-free loans. When you avail of this scheme, your bank enjoys a discount in the form of interest.

Where can you use this EMI offer?

Have you ever found yourself eyeing the newest collection of smartphones, and want you may replace your old, outdated mobile with a trendier one? We’ve all been there – scrolling for hours, looking for the new options, and watching unboxing videos, just to realize the price is so high for you to pay.

You should know that where you use this offer as at times you think you're doing a good deal but you're not.

Also, it’s not simply phones – it’s similar to a variety of products and services. From laptops and cameras to foreign tours, furniture, and even clothes, we desire to afford things that appear unaffordable. But now there’s good news for you so that they can be within your reach. Nowadays many brands have added a variety of payment choices for your convenience. Of these, Equated Monthly Installment (EMI) plans have taken India’s e-commerce economy by storm.

Apart from regular EMI plans, a brand new version has emerged that produces life more cost-effective than ever before: no-cost EMI. It is currently available on a variety of EMI products like consumer durable goods and expensive things such as mobile phones, laptops, cars, TVs, and so on.

Benefits of No Cost EMI

If you are thinking of using a no-cost EMI scheme to fund your next purchase, so here are some benefits that you can expect.

There are many advantages of EMI as this offer makes expensive items affordable for those who can't afford it.

All your needs become affordable

Birthdays, festivals and special occasions like anniversaries are undoubtedly a reason for celebration. However, they will even be expensive affairs. You may want to buy a brand new phone for your father’s birthday as a token of love for him. But maybe you do not have the savings to do so. With no-cost EMI, all these expenses are within your reach.

Another benefit of No Cost EMI is that you do not need a credit score or a credit card to take this offer, you can simply complete your purchases. Therefore, whether you are thinking of upgrading your mobile phone, booking a trip, or enrolling in certified courses to enhance your skills, you’ll fund it through no-cost EMI.

Zero Interest

Unlike traditional EMI schemes, a no-cost EMI has zero interest value. This makes your purchases even more affordable.

You can avail of it on multiple platforms

You can take EMI through on-line and offline merchants such as:

Online Retailers

  • Flipkart
  • Amazon
  • Paytm

Travel Merchants

  • Yatra
  • MakeMyTrip


  • Myntra

Educational Websites

  • UpGrad
  • simplilearn

Easily available online

Traditionally no-cost EMIs are provided by banks to customers who have a credit or debit card after doing some paperwork. But today the process of availing of this scheme is completely online. You can also avail of this EMI offer without a credit or debit card. You just need to enter your details for the KYC process and avail the scheme on your Aadhar card.

So whether you are wanting to buy a new laptop, computer, or book a vacation, be it offline or online, now you can easily afford it without paying any extra charges on EMI.

Thus, these are some important benefits of No Cost EMI.

Now moving towards how zero cost EMI works.

How No Cost EMI Works?

There are two methods through which zero cost EMI works. One of the most common methods is to do without the discount and instead pay this amount to the bank or financial organization to cover the interest value. Another one is by adding the interest amount to the cost of the item. Let’s explore these schemes in detail:

There are two ways in which the EMI operate, one can select the way that suits his requirements and fits in the budget.

When discounts equal interest:

The foremost common means through which retailers give ‘No-cost EMI’ is by providing discounts equal to the full amount of interest to be paid. Suppose you wish to shop for a phone that costs Rs.30,000. According to the 3-month EMI scheme, at a 15% rate of interest, you would need to pay an interest amount of Rs.4,500. However, in Zero cost EMI, you’re exempted from discount and you pay the original price of the Smartphone in EMIs.

However, if you make a direct payment, the Smartphone would cost only Rs.25,500. You get it at a discounted price of Rs.25,500. If you choose the No Cost EMI, you end up paying Rs.30,000. You don’t get the Rs.4,500 discount that goes to pay interest on the loan. The total price you pay on the Smartphone is divided into money paid to a retailer and interest paid to a financier.

When the interest is added to the product price:

The second way in which such schemes operate is by adding the interest amount to the cost of the product. For example, the product costs Rs.15,000. The retailer attracts you to shop for this product under the ‘No-cost EMI’ scheme for Rs.17,250. Here the interest of Rs.2,250 is already added to the cost of your product and will be paid by you in installments. Hence, if you got a 3-month EMI scheme, then the amount payable by you will be Rs.5,750 per month. At times, the Rs.2,250 also covered as the processing fees.

So in these two ways the No Cost EMI works. Hoping that now you are fully aware of the meaning of No Cost EMI and now you are able to select the appropriate way.

Should you go for No Cost EMI? 

You can choose No Cost EMI if you desire to shop for an expensive or famous product that is not in your budget. If you don’t want to spend at a time or don’t have the required cash to make a direct payment. Then you are getting a lucrative deal by availing an extra discount. All you need to start creating your credit history and credit score by availing of a short quick consumer durable loan.

When you take a loan on the No Cost EMI scheme you must be even more careful regarding the down payment and processing fees, if any. Read all the terms and conditions carefully. The retailers don’t give this offer on every item that they sell. Also, if you are not having a credit card from the relevant bank that gives this offer, you can’t get this EMI deal, if it is attached to the credit card.

In addition, the credit limit on your card gets blocked too for the whole transaction value even though you’re able to pay the EMIs. There are other financiers who provide such schemes to consumers without credit cards or credit scores. Such financiers have people to support you with the processing of loans within 5-10 minutes. The plan might sound attractive. But if not used carefully it will affect your financial budgets and eventually your credit scores.

Well, you can plan to purchase the most expensive items as well via No Cost EMI offers if you have a stable financial budget and some long term investment plans.

FAQs on the NO Cost EMI offer

How is EMI calculated in a no-cost EMI offer?

In a no-cost EMI offer, the EMI is calculated using a simple formula: A/N, where A is the cost of the product and N is the number of installments in the EMI.

How to get an EMI Network Card Pin?

One can easily get an EMI Network Card pin on his mobile by sending an SMS ‘PIN’ to the mobile number 9227564444 from the registered mobile number.

Is any processing fee charged for no-cost EMI?

In No-Cost EMI offers, usually, the buyers do not need to pay any processing fee or interest on the item purchased. For example, if a person has purchased a product of Rs.12,000 and has selected an EMI tenure of 6 months, then he will need to pay Rs.2,000 per month.

Will your bank continue to charge you interest on your EMI?

Yes, the customer’s bank will charge interest continually. However, this interest amount is often provided to the customer as a discount upfront at the time of purchase.

COVID-19 Update | No Cost EMI

As RBI has given permission for EMI holiday so that many borrowers can get relief during the coronavirus pandemic. Well, many require this support dreadfully. While others can afford to pay their EMIs in continuity. But still, most of the financiers have not given the default option of continual payment of EMIs. Most of the borrowers are waiting for clarity if there is any cost included in this EMI holiday or is it aided by government subsidy. Also, if there is any cost, what are the available options for borrowers to reduce the impact. Moreover, all financial institutions such as banks, housing finance companies are allowed to give a 3-month moratorium to borrowers who pay EMIs. As per details from RBI is awaited but according to the industry experts, the borrower does not require to pay EMI without impacting the credit score.


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