Unlike yesteryears, when you had to make the entire down payment while purchasing a product, you have the option of dividing the cost of any product into monthly instalments. Of course, you cannot do this normally with cash. With digital payment options, including plastic cards such as credit card and debit card, you can now convert the total cost of a smartphone into easy EMIs.
The cost of devices today warrants this kind of payment mechanism. For instance, if you want to purchase the iPhone 12 Pro Max, it won’t be possible for most users to pay more than Rs. 1 lakh in one go. Instead, consumers can convert the total cost of the device into convenient monthly instalments, and pay them over a fixed tenor. One can choose the tenor while making the purchase, which not only makes it more convenient, but also gives you the opportunity of paying for your desired smartphone in bite-sized instalments.
However, the fact that you can do something doesn’t mean you should. So is buying a smartphone on EMIs a good idea? Let us delve deeper into this topic, and look at the pros and cons of purchasing a smartphone on equated monthly instalments.
Pros of buying phones on EMIs
No upfront payment
When you purchase a smartphone on EMIs, you usually have two options. Either you pay a certain amount upfront, and pay the rest on easy EMIs, or you pay the entire amount in monthly instalments. For most of us, coughing up the entire amount to purchase a smartphone can be difficult. For instance, when you’re purchasing one of the best phones under 30,000 INR such as the Oppo Reno4 Pro, it might not be possible for you to pay the entire amount in one go, as it could put a dent in your savings, or might eat up a significant portion of your salary.
However, by opting for EMIs, you don’t have to pay anything upfront, and divide the total cost of the smartphone into monthly instalments. This way, you can enjoy using your new smartphone, while paying for it in flexible tenors, which can range from 3 months to 24 months.
Bite-sized monthly payments
Equated monthly instalments (EMIs) allow you to pay for expensive smartphone models in bite-sized monthly payments. This ensures that your savings aren’t depleted. Anyone making Rs. 30,000 – Rs. 40,000 per month wouldn’t be able to afford a mid-range smartphone that costs around Rs. 30,000. After all, we cannot spend our entire month’s salary on just one smartphone, as we all have responsibilities and bills to pay.
That is why even after the initial lockdown scare last year, consumers went back to buying consumables on EMIs after May.
Cons of buying phones on EMIs
Penalties and blot on credit report
When you decide to opt for EMIs, you have to understand the implications, in case you fail to make timely payments. Any delays will result in you facing heavy penalties, along with your credit score taking a beating in case of defaults. This in turn would mean that you will face problems when you apply for a new loan, or want to get a new credit card.
This is why people tend to think twice, especially while purchasing big-ticket items with substantial payment terms. For instance, you can pay Rs. 2,000 – Rs. 4,000 per month without many problems. However, paying Rs. 10,000 – Rs. 20,000 per month as EMIs could land you in serious trouble, especially if you do find yourself in a situation where you cannot make the payment.
High interest rates
When you opt for EMIs, you pay certain processing fees, while banks can charge interest rates anywhere from 12 percent to 18 percent, or even more sometimes. When we consider the length of the tenor, and the depreciation rates, we usually observe that consumers pay anywhere between 40 – 50 percent more of the smartphone value by the end of the EMI tenor. Unless you purchase phones at No Cost EMIs, and with tenors less than 9 months, it usually isn’t worth purchasing phones on EMIs.
That said, you can now purchase the smartphone of your choice at No Cost EMIs, and at repayment tenors of your choosing by shopping on the Bajaj Finserv EMI Store. Get the smartphone delivered to your doorstep within 24 hours of placing the order!
