Should you buy it on EMI? Questions to ask first

An EMI shows the monthly amount, which is easy to fit into a budget. What it hides is the total you will pay and how many months of your income it claims.

1. What is the total cost?

Multiply the EMI by the number of months and add any fees. Compare it with the price. The difference is the cost of borrowing.

2. Can you pay in full soon?

If you could save the amount in a few months, waiting may cost far less than financing.

3. Is it an asset or a want?

Borrowing for something that holds value or earns, such as a home, differs from borrowing for something that loses value fast.

4. How many EMIs are you already paying?

A common guide is to keep total EMIs within a modest share of your monthly income. Beyond that, a single surprise can strain everything.

5. What happens if income dips?

Fixed payments continue even in a bad month. Make sure the EMI still fits if your income falls for a while.