No-cost EMI: is it really free?

A no-cost EMI promises that you pay the same amount as the price, split into instalments. Sometimes that is true. Often the cost shows up in another form.

1. Check where the interest goes

In many offers the interest is still charged, but the seller gives an upfront discount of equal value. If you pay the full price in cash, you may get that discount instead.

2. Look for processing fees and taxes

Fees and the taxes on interest are often not covered. These can make the real cost higher than the label suggests.

3. Compare with the cash price

Ask what the price would be with no EMI. If cash is cheaper, the EMI is not really free.

4. Remember it still uses your limit

Putting the purchase on a card reduces your available credit until the instalments are paid.

5. Do the arithmetic

Add up every payment and every fee, and compare it with the lowest price you can get. The smaller number wins.