What is No Cost EMI? Pros, Cons, and How It Works

By Emitoolbox • 2025-08-13

Tags: emi, finance, shopping, india

What is a No Cost EMI? (Explained Simply)

If you've been shopping online or at a large electronics retailer in India most likely, you've seen "No Cost EMI" or "No cost EMI" deal. It's an attractive deal: buy now, pay later, and with no additional cost! But what exactly does it mean? Let's look at it in detail.

What's the Best Way to Make Free Cost EMI Work?

"No No Cost EMI" means that you can purchase a device to pay with each month in installments (EMI) without having to pay any additional interest. For instance, if a smartphone costs you Rs24,000 and select the 12-month No Cost EMI, you have to pay Rs2,000 per month. No additional costs, isn't that do you think?

However, here's the problem It's not in fact "zero." However, instead the brand or seller typically offers an amount of discount that is that is equal to the amount of interest or adjusts the price to make sure you don't feel the impact of the interest. Sometimes, banks charge interest however the seller is able to cover it by cutting the initial discount.

Benefits to No Cost EMI

Easy to use on pocket: There is no need to spend for the entire amount in one go. It is possible to spread the cost into several months.
There is no extra interest (on the paper): You pay only the cost of the item plus a single rupee (if you truly "no price").
Makes big purchases possible: Useful for buying televisions, laptops, phones or furniture, even without spending a fortune.
Is available on credit/debit Cards and Bajaj Finserv Cards: Many banks and NBFCs have this option.

The Cons of No Cost EMI

Hidden Costs Sometimes processing charges and GST for interest may be added which makes it not "zero expense."
Lower Discounts There is no way to receive any other cashbacks or offers If you opt for No Cost EMI.
Special Products Some brands or products do not provide No Cost EMI.
Bankruptcy of Credit Cards The full amount can be blocked from your credit card's limit when you first sign up.

What are the things to consider before making the decision to go with No Cost EMI?

Processing Cost: Are there fees charge for an upfront or monthly payment?
Tax on interest Sometimes GST is imposed on interest, even if discount on interest was negotiated.
Refund/Return Policy If you want to return the item how will the EMI be treated?
Ineligibility Are your debit card and your bank suitable for the offer?
Real Savings Examine the cost without and with EMI. Sometimes, paying in advance with discount can be cheaper.

The Bottom Line

Absolutely No Cost EMI is an effective method to control the flow of cash, however, be sure to take note of the fine small print. Contact the seller, or look up the terms of the website. In the event that there's hidden fees the item isn't truly "no charge." Use it with caution when you are making large purchases. Don't allow you let "EMI" tag lure you to buy things you don't want.

Most Frequently Answered Questions (FAQ) concerning No Cost EMI

Q. What is No Cost EMI really free of any additional costs?
A. It's not always the case. There are times when there are processing charges and GST on the interest. Always verify the final price and the terms prior to purchasing.

Q. What happens to other discounts when I select No Cost EMI?
A. A lot of sellers will not offer other discounts or cashbacks when you choose No Cost EMI, because the discount already is utilized to pay the interest.

Q. Can I close my pre-closing or be able to pay my No Cost EMI early?
A. It's dependent on the bank or card provider. Some permit pre-closure, however they may have a penalty or charge.

Q. What will happen if want to return the item I purchased through No Cost EMI?
A. Typically usually, EMI will be cancelled, and then the balance refund, however, you must you should check the return policy of the seller and the card's statement to confirm.

Q. Is No Cost EMI available on debit cards?
A. Yes, certain banks and platforms provide No Cost EMI on select debit cards, however it's more prevalent on credit cards.