When you are buying something in India, let’s say some electronics item, some other product which is somewhat expensive, or something like that. Almost all the time, there is another option when it comes to deciding the payment method, and that is simply paying in installments aka EMIs. This kind of payment option is famous in India, especially since the big eCommerce platforms allow people to buy things in EMIs or No-Cost EMIs. But the real question is, should you be going down this path, or is it just better to pay the whole amount upfront? Well, that’s what we will be covering in today’s post, we’ll see if it is really worth buying things on EMI in India, and what are the possible pros and cons of it. Alright, here we go now.
Benefits of Buying Things on EMI
1. More Affordable
The main reason to choose an Equated Monthly Installment (EMI) is that it makes buying things more affordable. May it be a new car, a home appliance, or maybe the latest electronic gadget, the EMIs always enable a person to break down the enormous cost into smaller monthly amounts, you know, just to ease that up on the pocket. This way, it makes the expensive item much easier to purchase and much less of a hit to your budget right now.
2. You Own It Immediately
A big plus of buying with EMIs is that you own the item right away. Even when you have failed to make full payment for the product, there is always the possibility to take home your dream thing right away with the help of EMIs. This comes in handy for the items one might be in need of urgently, such as a fridge or a laptop to work with. One can start using the item in reality and otherwise would have enjoyed it with the costs paid from the pocket. This makes your purchase feel more rewarding from the start.
3. Flexible Payment Options
Nowadays, many banks give you flexible EMI plans. You can very well decide on your own how much to pay per month and for how many months the period of payment should be in accordance with your budget. This flexibility is one of those great reliefs since it helps anyone to put their money into very good and profitable management without having to cut back on other important expenses or investments.
4. Improves Your Credit Score
It is no secret that paying your EMIs on time can boost your credit score. This is because every on-time payment is proof that you are a reliable person with money and spending. A good credit score will only portray that you are in good financial standing. It also allows you to be eligible for loans or credit cards with better terms and low interests in the future, hence opening even more financial opportunities for you.
Drawbacks of Buying Things on of EMI
1. Costs More Money
While EMIs make buying things easier and let you own them right away, they usually cost more. Till the time one finishes paying all the EMIs, he/she may end up paying more than the original price of the product, and in that, add extra charges like interest and fees. That essentially means that EMIs over the years could actually make you pay more money than the decided original amount for the product or service.
2. Keeps You in Debt Longer
EMIs can spread your payments over a long time, which means you stay in debt longer. This can be quite a big deal for an expensive thing like a house or a car, where one has to pay EMIs for years. Being in debt for a long time can make it hard to spend on other things and might tie up your money as long as you’re making payments.
3. Too Many Commitments
It’s easy to buy things with EMIs, but this can lead to taking on too many monthly payments. Any unexpected change, like loss of job or sudden bills, and you are soon to be struggling. So yes, make sure to think about your money situation and agree to EMIs only if you can handle it later on without much stress.
4. Unexpected Extra Costs
Sometimes EMI plans have extra costs that you don’t know about at first. Those hidden costs may include processing fees, late fees, or even early EMI closure charges. These hidden charges may hike your costs. Always read through the EMI terms carefully to know about such extra charges so that you have a clear idea of what you are going to be paying.
5. Can Hurt Your Credit Score
Paying EMIs on time can help your credit score, but missing payments can hurt it a lot too. Every single missed payment is recorded, which lowers your credit history and makes it harder for you to get loans or credit later down the line. Failure to keep up with payment of EMI on time may result in adverse remarks being posted on your credit report, thereby hurting your future creditworthiness.
So, Is the EMI Option Really Worth It in India?
All in all, deciding to go for an EMI plan when buying things in India really depends on your money situation and what you think is important. The good thing with EMIs is that one can be able to make huge purchases but pay in smaller bits on a monthly basis. That would actually be good if you were to work with a budget. But, there is a flip side to the EMIs too: most of the time, the cost becomes even higher with the high interest and other extra hidden charges. Also, having to pay money every month for a long time can limit how much you can spend on other things or save for the future. So yes, it totally depends from person to person.
Conclusion
That’s all. With all these points in mind, you can easily decide whether this whole EMI thing is for you or not. Sure, if you have a budget issue right now, and you can’t afford the desired product by paying the full amount upfront, then you can easily utilize the EMI option. But always keep in mind that there sure are some drawbacks to that, which we already mentioned above.
