RakaKaKaka
Adept
Saw lotta deals on mobiles with zero percent interest emis. how do they work and whats the fine print ? Can we prepay these loans ? Its mostly by bajaj i see but on flipkart even hdfc giving it on samsung ON8.
How do zero percent emis work ?
- Thread starter RakaKaKaka
- Start date
RBI banned such schemes couple of years ago because
1) there were often some hidden charges involved, which is cheating.
2) and if there was really 100% transparency, i.e., no extra costs involved, then setting low/zero interest rates on loans could disrupt the market.
so, to circumvent the ban, Bajaj finserv is going to apply an interest rate but they'll pick up the tab themselves instead of charging the customer. to avail the scheme, customer needs to have their EMI card, which has a separate joining and yearly fees.
1) there were often some hidden charges involved, which is cheating.
2) and if there was really 100% transparency, i.e., no extra costs involved, then setting low/zero interest rates on loans could disrupt the market.
so, to circumvent the ban, Bajaj finserv is going to apply an interest rate but they'll pick up the tab themselves instead of charging the customer. to avail the scheme, customer needs to have their EMI card, which has a separate joining and yearly fees.
RakaKaKaka
Adept
yeah on their websote i saw 299 joining fee for 1 year. any way to get it free ? even paying 299 interest feels a hassle
also any idea if i apply how long will it take to get a card ? i wanna buy something online on zero emi[DOUBLEPOST=1476383705][/DOUBLEPOST]
yesi need for online purchase only so bajaj zero emi is worth it ??
i have no idea about any of those 0% EMIs... never opted for any EMI in my life. it's a cancer!
checkout Bajaj finserv's website. they have made dedicated page for the current diwali sale. so, you should be able to buy your membership right away!
As @Criminal pointed out, 0% Interest EMI schemes are banned by RBI because they amount to cheating the consumers. The processing fee and obscure charges they levy are often more than the applicable interest at prevailing interest rates.
The mindset of most Indian people is such that they will be prepared to crawl in the dust till Kasi if they hear that they will get a free lunch and often such hidden charges are overlooked/ignored.
So, no financial institution can offer 0% interest EMI schemes currently. So how do similar sounding schemes like the "No-cost" EMI scheme still exist? Simple, the ban prohibits a financial institution from offering such non-transparent schemes, so they are using a loop hole. See what they have done from the fine print.
So what they are effectively saying is that as a financial institution, they are abiding by RBI regulation and charging interest, but the brand manufacturer is giving a discount equal tot he interest charged. They are also free to charge processing fee as per their policies.
The mindset of most Indian people is such that they will be prepared to crawl in the dust till Kasi if they hear that they will get a free lunch and often such hidden charges are overlooked/ignored.
So, no financial institution can offer 0% interest EMI schemes currently. So how do similar sounding schemes like the "No-cost" EMI scheme still exist? Simple, the ban prohibits a financial institution from offering such non-transparent schemes, so they are using a loop hole. See what they have done from the fine print.
So what they are effectively saying is that as a financial institution, they are abiding by RBI regulation and charging interest, but the brand manufacturer is giving a discount equal tot he interest charged. They are also free to charge processing fee as per their policies.
RakaKaKaka
Adept
@^bajaj charges no procrssing fee and 399 joining fee so its still lesser than the other banks which charge 13% interest
6pack
ex-Mod
So true. :rofl:
Bank & Financial institutions are smart and cunning. They won't give anything for free. There's something hidden somewhere in the fine print.
The EMI card is a loan card. No one in their right mind especially a Financial institution will give out a loan on 0% interest.
rdst_1
Skilled
A credit card is a loan for 45 days at 0% interest, is it not.
I just purchased Google Pixel at 'No cost EMI'.
Flipkart calculated the interest portion and applied the same as discount in the cart. So basically EMI cost gets taken over by the seller instead of the buyer.
Even earlier it was the same. When I was buying my TV 2 years ago, I received a handsome discount since I was paying in cash. Another buyer who bought the TV on 0% EMIs had to pay a price very close to the MRP. When I enquired with the showroom guy, he told me that the interest of the EMIs was already taken into account when pricing the product as nearly everyone preferred going for them. If I hadn't haggled and neither taken the EMIs, I would have been taking a loss and since then I was careful about haggling at any store which offered 0%EMI since I was usually paying full cash upfront.
djvirus
Disciple
For existing Bajaj Finance EMI customers they charge 49 rs yearly for the card and if incase you have an active purchase for the previous year. No charge for the card. However 0% interest fee EMI aint that great, processing fee is applied and moreover its on MRP of the purchase. It would only benefit those who don't have a credit card.
^^ No, credit card is not a system to get 45 day interest free loan from a bank. It is a system to obtain goods on credit with the bank acting as your surety and mediator.
i.e. the credit card shows that a bank trusts you and since the merchant trusts the bank, they will give the item to you on credit for which the merchant will be able to collect from the bank directly when they want.
You can chose to pay the amount to the bank with in the specified period or alternatively convert it into a loan.
rdst_1
Skilled
A credit card, despite it's name, is a debt instrument just like a loan. I have used credit cards earlier to get an interest free loan for an indefinite amount of time. All it required was a little creative thinking and a friend in US on student VISA.
Even if we disregard the above case ( as not everyone can replicate it easily), I can counter by saying that it is a form of a loan where you get goods instead of cash. I've personally seen businesses use credit cards when in dire need of funds and so even though it isn't called a loan per se, it definitely serves the same purpose as one is getting monetary benefits.
Credit card can be and is often used as a debt instrument for sure, but the particular scenario you were talking about is not a standard "loan from bank" scenario. It is sort of like the tab system that some people use. For example, if you have enough credibility with a kirana store, you can obtain whatever provisions you need for the month without paying each time. The store keeper will simply maintain a tab against your name and at the end of the month, you settle the entire bill in one go. You don't have to pay any interest. When you don't settle the bill beyond a stipulated period, it can turn into a loan.
6pack
ex-Mod
Credit cards start adding 35% interest from the day you brought something. It looks like zero percent because you have option of paying full money upfront in 15-20 days from bill date or around 45 days from start of month. If you only pay the minimum, you get charged the full 35%.
EMI on credit cards are charged at 13-15% depending on the bank. It's not zero. Paying upfront 1500-2000 rupees processing charges is like giving out some % interest which the FI must have calculated before hand.
EMI on credit cards are charged at 13-15% depending on the bank. It's not zero. Paying upfront 1500-2000 rupees processing charges is like giving out some % interest which the FI must have calculated before hand.