Processing fees, GST and forfeited cash discounts can make instalment plans cost thousands more than paying upfront, so shoppers should compare the final price before buying.
Festive-season promotions on smartphones, televisions and home appliances often make “no-cost EMI” look like an easy win for shoppers who do not want to pay the full bill at once. But Business Today warned that these offers are not always as cheap as they appear, because the final amount can rise once processing fees, GST and the loss of upfront discounts are added in. Financial planners quoted in the report said buyers should compare the full cost of instalments with the price for an outright purchase before deciding.
The difference can be significant. In one example cited by chartered accountant Rohit Saluja, a phone priced at ₹60,000 would attract a ₹500 processing fee and GST if bought on a no-cost EMI plan, while a ₹3,000 cash discount would disappear if the customer did not pay upfront. That would push the EMI route to ₹60,590, compared with ₹57,000 for a one-time payment. In other words, the financing option would end up costing ₹3,590 more.
Other consumer-finance coverage has made the same point from different angles. A report by Business Standard said merchants often absorb the interest burden by quietly removing the discount available to cash buyers, which means the customer still pays more in practice. Mint and NDTV Profit have also noted that processing charges, late-payment penalties and other terms can change the economics of the deal, even when the headline offer says “no-cost”. The label may describe the structure of the instalments, not the true end price.
That does not mean EMI is always the wrong choice. Kundan Shahi, founder and chief executive of Zavo, said the option can make sense when the item costs the same either way and extra fees are small, particularly if keeping money in savings helps preserve an emergency buffer. He added that the calculation should also consider whether spare cash could earn a better return elsewhere, although investment gains are never guaranteed and tax may reduce them.
The real test is whether the instalment plan suits both the household budget and the broader cash position. If paying in full would drain savings meant for medical bills, job loss or another shock, a slightly dearer EMI may still be the more prudent option. But if the buyer is already carrying several instalments, or if the upfront discount is meaningful, a lump-sum purchase is often the better-value choice. Before signing up, consumers should check the total payable amount, the tenure, processing charges, GST, foreclosure fees, missed-payment penalties and whether the offer applies only to a particular credit card or removes another discount at checkout.—
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
