No Cost EMI को आसान भाषा में समझिये - YouTube

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Namaskar, my name is Mukul, and welcome to Asset Yogi.

Nowadays we do a lot of online shopping

Especially, most people are buying electronic items online

And you get an option of NO COST EMI their on Amazon, Flipkart

Which is also called 0 cost or 0% EMI.

In this, you're given the option of EMI

For example, if any item cost Rs. 20,000 then

It is said that you can pay this in EMI without any interest on it

Let's say EMI of 12 months.

So is this No Cost EMI actually No Cost?

We're going to discuss in this video and along with that,

There are many frauds happening in the market so we'll discuss that how to avoid those

And No Cost EMI is not only applicable for the online model

If you visit any showroom to buy a TV, fridge or washing machine

You'll see this 0 cost EMI model there as well

So how to take advantage of 0 Cost EMI and how to avoid fraud?

We'll see these in this video.

In fact, RBI also introduced a circular saying No Cost EMI is actually not No Cost.

We'll see that how the pricing and interests are hidden, in details

So stay tuned with this video.

Let's understand it with an example.

Rahul want to purchase a phone and his budget is Rs. 20,000

He started searching online and liked a phone

There he was getting 2 options

1. He can pay Rs. 20,000 upfront and buy that phone

2. No Cost EMI where he can pay Rs. 1667 per month for 12 months

So 12×1667= Rs. 20,000.

So he thinks that he won't have to pay all together and he doesn't have that much

So why not pay in 12 months that too without any interest.

Definitely, it is a very good option.

3. No Cost EMI at Rs. 1834 for 12 months with Rs. 2000 upfront discount.

So if you do 12×1834

It comes out Rs. 22,000.

So if you see, he got Rs. 2000 upfront discount

So actually he paid Rs. 20,000.

So the 2nd and 3rd options are almost the same.

These are the options in No Cost EMI that you see.

Rahul doesn't stop here, he reaches an offline store and searches for the best price for that phone.

He bargained in a store and was getting a price of Rs. 19,000

So in total, there are 3 options.

1. He can pay Rs. 20,000 upfront and buy that phone

Second, let's combine it, so he got the option of No Cost EMI.

3rd option is, he can buy from an offline store at Rs. 19,000.

So which one is the best option among all 3?

The best option here is NO COST EMI.

Why am I saying that. He's saving Rs 1000 from the offline store

But if he would be charged interest for 12 months, it might be easily 18%.

18% for 12 months becomes Rs. 2000.

So he is saving Rs. 2000 and he can utilize the money which he is saving

2nd, if someone is not having upfront money,

It becomes very convenient for that person to buy anything

Otherwise, if someone bought that phone through credit card and couldn't do its payment,

The interest rate is too high in that case around 36-40%.

So No Cost EMI is not at all a bad option.

But if he wants to get an upfront discount of Rs. 1000

The 3rd option is also not bad

1st option doesn't make sense because if he wants to buy at Rs. 20,000 upfront

then it's better to buy offline at Rs. 19,000 upfront.

So we understood that No Cost EMI is not at all a bad option

Then what is wrong here?

Why did RBI bring a circular on this?

Let's understand from where No Cost EMI came?

Let's say the manufacturer is providing the product online as well as to offline stores at the same rate.

Let's say the cost for retailers is Rs. 16,000.

The manufacturer asks for Rs. 16,000 per unnit and gives you freedom of selling it at any price till MRP.

So if they have to give Rs. 16000 to the manufacturer

then how much would have these online and offline stores have earned

If they are selling at Rs. 20000, hence getting Rs. 4000 and if they sold 1000 quantities per month

If we talk about Amazon or Flipkart, then how much profit did they earn?

They would have made Rs. 40 lakhs per month.

Now bank deals with manufacturer or Amazon or Flipkart

Bank asks if you are interested in earning Rs. 80 lakhs?

Who will say 'NO' to this deal

So the bank will ask to give No Cost EMI option on the shopping platform

And we'll earn too but with that,

it will be convenient for the people and hence, the volume will increase.

So basically, the bank asks to share Rs. 2000 profit.

So now, profit of Rs. 2000 per unit start going to the bank

And we were talking about this interest cost

So the retail sellers or Amazon, Flipkart start giving the interest cost at 18% to the bank.

So No Cost EMI comes from here.

You are not paying directly but the bank is paying

And If the sellers are paying Rs. 2000 to the bank and earning only Rs. 2000,

But instead of 1000 units, the seller might sell 3000 or 4000 quantities

So the profit will be Rs. 80 lakhs.

So if more number of units are sold, definitely it's profitable for all.

If the manufacturer is selling 4000 quantities

then they are also in profit and bank also earned a profit of Rs. 80 lakhs.

So what is the advantage or disadvantage for the consumer?

So the consumer is in profit if we talk about No Cost EMI

because you don't have to give upfront interest.

But why is this happening?

What are the disadvantages?

First, this model may be outdated or going to get outdated and a new model may be coming

So keep in mind that

Maybe the processor is old and a new model may be coming.

This can be a drawback

2nd, as we saw that the No Cost EMI is inbuilt in this price only

Price is decided such that it includes its cost.

If the margins would be lower then no one can take this much dent

If Amazon or Flipkart were able to earn Rs. 1000 only then how can they give Rs. 2000 to bank

And similarly, if the manufacturer had fewer margins, then they cannot give Rs. 2000 per unit to the bank.

So the pricing of the product is done accordingly.

And the 3rd reason for No Cost Or 0% EMI is,

whenever people buy on No cost EMI, they buy more items.

If you have Rs. 20,000 and you have to pay Rs. 20,000 upfront then you may have bought only 1 item

But if you got an EMI option, then you may buy 2-3 items.

That's why your buying increased and profit of store also increased.

So since we understood the model of No cost EMI,

Now let's see what are the problems and how you have to tackle them.

As a consumer, what all problems you can face,

Firstly, the model may be outdated or old so keep in mind that

which model you want and that should be your first priority.

Secondly, if you're choosing No Cost EMI,

you should ensure that enough money is there in your account.

If the EMI is bounced, you may face late payment charges and a penalty

So maybe that exceed your savings.

3rd problem is, sometimes the bank plays more smartly with you.

When you buy an expensive item, let's say worth Rs. 40-50 thousand,

Bank connects with you on a phone call and asks that whether the transaction is done by you or not

Saying we just wanted to confirm.

So definitely they can confirm it but with that, they tell you about the No Cost EMI option

And also tells you about their EMI's.

Now you won't calculate that whether the interest is charged within EMI or not.

In that, it might be No Cost EMI for 6 months

And they won't tell you this that this is No Cost for 6 months

They will just tell you that this is No Cost and will tell you about the EMI's

But maybe, it is No Cost for 6 months and then they might charge an interest rate of 24%

Which is very high. So keep this in mind.

Do not agree on a phone call and tell them to send the terms and conditions on e-mail

and tell them that you will approve there if you want.

And 4th and final thing, if you want to go with No Cost EMI then there's no problem in that.

Just do your calculations that which is the cheapest or more suitable option.

If you like this upfront discount of Rs. 1000 then you can go with that

If you want to pay upfront money and don't want to disturb your discipline

and want to experience the convenience of online shopping

No Cost EMI option is very good there's no problem in that so if you don't have an immediate amount,

You can go with that but keep the things in mind which I already told you.

Go through the terms and conditions and check for how many days this EMI is at no cost.

In fact, if you click on the option while shopping online,

You can read these.

So keep these points in mind

No Cost EMI is definitely not a bad option

You just need to take care of some things.

I hope you got information through this video

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