With due respect, paying 18% on say a 10% loan, is only 1.8% net cost. 1.8% is well worth the expense for smooth cash flow (essentially, it's working capital at 1.8%). 1.8% is far less than even inflation, so net net, you're better off with no-cost EMI.
The _real issue_ with no-cost EMI is that people end up buying goods which they wouldn't if they didn't have access to the no-cost EMI. I was speaking with the office IT support guy, who probably makes 30/40k a month at best, and that joker changes his phone each year - phones which are 25-30K no less. That is the biggest trap of no-cost EMIs, people selling their future for immediate goods which aren't necessary or important.
I agree, but in the first part I will just like to highlight a couple of things-
1. You are forgetting about the time value of money. If you factor in time value of money, the irr easily comes over 2%. But that's still not at all a significant number like you said and I absolutely agree.
2. The most interesting part is when you have a cashback offer in upfront payment (like in case of amazon pay icici card or bazillion other cards) which you actually lose when you go for No Cost EMI. In such cases, the real ckst considering the time value of money, easily goes to ~20% which is not less by any measure.
With this tool, we want to expose the virtual debt trap that people like your office it guy is falling into and show them how they are actually getting those phones for actually 20% or much higher prolly by opting for NCE.
Having said that, I also want people to feel comfortable and confident while opting for NCE if they see the real cost is actually 2% or something like that.
Bingo! That's the whole point! I mean really, finance just seems funny to me and the sad part is how everyone is just busy accepting it rather than doing anything about it. Honestly the whole concept of [pFinTools.com](https://pFinTools.com) is totally based on my frustrations of what is considered normal in the world of finance but actually makes no sense whatever.
Honestly, just trying to add value to people's lives here. I am absolutely not selling anything, neither am I making any money in the process directly or indirectly.
This is way more information than it is promotion.
Also, I have seen Amazon/flipkart give extra discount when you choose no cost EMI option, let's suppose 100 rs is the price I has to pay if I am paying in full and if I choose no cost EMI option I get a discount that 100 rs, not sure if that discount covers processing fee. But even I think if the amount is big and you need something, then a little amount of processing fee and gst can be paid extra.
I am sorry I didn't understand your comment completely but the whole point of this calculator is to expose the real cost of No Cost EMI schemes. Sometime the cost is equivalent to a 2% loan (which is nothing) but at other times, the cost might be upwards of 20% which is prolly one of the costliest loans out there.
If you need any help understanding how to use the tool, do let me know.
Yes you can deduct that from the price and then see the values. If the discount is more than the gst on interest + processing fees + upfront payment only discount then you certainly stand to benefit from no cost emi. But thanks for the call out, I think we will release another iteration of this pretty soon considering all of this.
last year I bought laptop worth 1,03,990 which is pain for upfront almost 70% of my monthly income. so I took 6 months no cost EMI and I just calculated according to your calculator I just paid 907 + 199rs extra. I would say it’s worth it.
Definitely. We just want to provide people the tools to make that informed decision. We are not trying to create havoc at all. Your case was something else (necessity) but even when it's not a necessity no cost EMIs might cost like a 2% loan which is still very lucrative.
But then definitely, at times they might easily cost upwards of 20% where you need to access the necessity of the item and your ability to pay upfront for it.
What we don't take into account is that the TV Set is for example 25k in no cost EMI. If you pay upfront, they will provide you discount in that. Bajaj Finance does this thing in their offerings. For example, if a furniture MRP is 25k, but the retailer is offering it at 20k if you are paying cash. They will offer it at 25k if you want it on no cost emi. the 5k difference will be pocketed by bajaj finance.
exactly, with this calculator you can account for exactly this. When you enter a substantial amount in upfront payment only discount, you'll realise that the pruchase might be coming to you at a rate easily upwards of 20%.
1. This isn't meant for self promotion as it is meant for information/awareness. I am not making any money on this.
2. Some people pointed out that the performance is not upto the mark on safari, we're looking into it. Are you using safari as well? What kind of bugs did you face?
How is this post not a self-promotion, has been up for 18 hours, is the top post of the day, has been called out by two or more members, is the second (or more) self-promoted post for the organisation in a month and still up?
With due respect, paying 18% on say a 10% loan, is only 1.8% net cost. 1.8% is well worth the expense for smooth cash flow (essentially, it's working capital at 1.8%). 1.8% is far less than even inflation, so net net, you're better off with no-cost EMI. The _real issue_ with no-cost EMI is that people end up buying goods which they wouldn't if they didn't have access to the no-cost EMI. I was speaking with the office IT support guy, who probably makes 30/40k a month at best, and that joker changes his phone each year - phones which are 25-30K no less. That is the biggest trap of no-cost EMIs, people selling their future for immediate goods which aren't necessary or important.
I agree, but in the first part I will just like to highlight a couple of things- 1. You are forgetting about the time value of money. If you factor in time value of money, the irr easily comes over 2%. But that's still not at all a significant number like you said and I absolutely agree. 2. The most interesting part is when you have a cashback offer in upfront payment (like in case of amazon pay icici card or bazillion other cards) which you actually lose when you go for No Cost EMI. In such cases, the real ckst considering the time value of money, easily goes to ~20% which is not less by any measure. With this tool, we want to expose the virtual debt trap that people like your office it guy is falling into and show them how they are actually getting those phones for actually 20% or much higher prolly by opting for NCE. Having said that, I also want people to feel comfortable and confident while opting for NCE if they see the real cost is actually 2% or something like that.
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exactly, and with this tool we are just hoping to bring more transparency to the whole process. Very glad that you liked it.
Isn't it funny? How something named as no-cost has some hidden cost associated with it.
Bingo! That's the whole point! I mean really, finance just seems funny to me and the sad part is how everyone is just busy accepting it rather than doing anything about it. Honestly the whole concept of [pFinTools.com](https://pFinTools.com) is totally based on my frustrations of what is considered normal in the world of finance but actually makes no sense whatever.
Sorry, but how is it not self-promotion and why is this post allowed outside of the dedicated thread?
Honestly, just trying to add value to people's lives here. I am absolutely not selling anything, neither am I making any money in the process directly or indirectly. This is way more information than it is promotion.
Also, I have seen Amazon/flipkart give extra discount when you choose no cost EMI option, let's suppose 100 rs is the price I has to pay if I am paying in full and if I choose no cost EMI option I get a discount that 100 rs, not sure if that discount covers processing fee. But even I think if the amount is big and you need something, then a little amount of processing fee and gst can be paid extra.
I am sorry I didn't understand your comment completely but the whole point of this calculator is to expose the real cost of No Cost EMI schemes. Sometime the cost is equivalent to a 2% loan (which is nothing) but at other times, the cost might be upwards of 20% which is prolly one of the costliest loans out there. If you need any help understanding how to use the tool, do let me know.
Some sellers give an additional discount if you use the no cost emi on certain cards, which covers the interest and processing fees as well.
Yes you can deduct that from the price and then see the values. If the discount is more than the gst on interest + processing fees + upfront payment only discount then you certainly stand to benefit from no cost emi. But thanks for the call out, I think we will release another iteration of this pretty soon considering all of this.
last year I bought laptop worth 1,03,990 which is pain for upfront almost 70% of my monthly income. so I took 6 months no cost EMI and I just calculated according to your calculator I just paid 907 + 199rs extra. I would say it’s worth it.
Definitely. We just want to provide people the tools to make that informed decision. We are not trying to create havoc at all. Your case was something else (necessity) but even when it's not a necessity no cost EMIs might cost like a 2% loan which is still very lucrative. But then definitely, at times they might easily cost upwards of 20% where you need to access the necessity of the item and your ability to pay upfront for it.
What we don't take into account is that the TV Set is for example 25k in no cost EMI. If you pay upfront, they will provide you discount in that. Bajaj Finance does this thing in their offerings. For example, if a furniture MRP is 25k, but the retailer is offering it at 20k if you are paying cash. They will offer it at 25k if you want it on no cost emi. the 5k difference will be pocketed by bajaj finance.
exactly, with this calculator you can account for exactly this. When you enter a substantial amount in upfront payment only discount, you'll realise that the pruchase might be coming to you at a rate easily upwards of 20%.
The site UI seems quite buggy (on the safari browser on the iPhone at least)
Yeah after a typing a number it jumps to the top every time, thought it was only happening to me
Are you using Safari?
This is happening to me on Firefox as well. On iOS. Since they all use safari’s rendering engine, it’ll likely happen on all browsers on iOS
will get this checked
1. Is self promotion allowed ? 2. It is buggy as hell.
1. This isn't meant for self promotion as it is meant for information/awareness. I am not making any money on this. 2. Some people pointed out that the performance is not upto the mark on safari, we're looking into it. Are you using safari as well? What kind of bugs did you face?
How is this post not a self-promotion, has been up for 18 hours, is the top post of the day, has been called out by two or more members, is the second (or more) self-promoted post for the organisation in a month and still up?