No Cost EMI Explained: Benefits, Risks & How It Works

When you shop for that dream smartphone or a brand-new washing machine online, you’ve probably seen an option called “No Cost EMI.” Sounds perfect, right? You get your product now and pay later in small installments — without paying a single rupee extra. But here’s the thing: “No cost” doesn’t always mean zero cost.

Let’s break it down simply, so you know exactly what you’re signing up for.

Key Takeaways

• No Cost EMI lets you split payments into easy installments without visible extra interest charges.
• The interest is usually covered by the seller or adjusted in product pricing.
• It’s not always the cheapest option — check the math before buying.
• Works best for planned, high-value purchases where upfront payment is tough.

How Does No Cost EMI Actually Work?

A No Cost EMI scheme is essentially a marketing arrangement between the seller, the bank/NBFC, and sometimes the payment gateway.

Here’s the process in action:

• The bank or NBFC charges interest as they normally would.
• The seller offers a discount equivalent to the total interest.
• You see a “zero interest” EMI amount at checkout.

For example, if your phone costs ₹30,000 and the 6-month EMI interest is ₹1,800, the seller might discount the phone to ₹28,200 before applying EMI.

Is No Cost EMI Really Free for You?

Not quite. While you avoid paying interest directly, the cost often sneaks in through:

• Reduced upfront discounts (you might miss out on bigger cash offers)
• GST on the interest portion, which you still pay
• Slightly inflated product prices

In other words, you might be paying in a different form.

What’s the Difference Between No Cost EMI and Regular EMI?

With regular EMI, you pay both principal and interest.

With No Cost EMI, the interest cost is offset by the seller.

Example:

• Regular EMI on ₹30,000 for 6 months at 12% p.a. → Total ₹31,800
• No Cost EMI → Total ₹30,000 (but possible hidden price adjustments)

Where Can You Use No Cost EMI in India?

It’s widely available across:

• E-commerce: Amazon, Flipkart, etc.
• Retail chains: Croma, Reliance Digital, Vijay Sales
• Lifestyle and fashion outlets: Myntra, Ajio, etc.

What Are the Pros of Choosing No Cost EMI?

• Helps manage big purchases without financial strain
• Immediate access to goods without full payment upfront
• Flexible tenures to match your budget

What Are the Cons or Risks of No Cost EMI?

• Merchants may inflate prices to absorb interest
• You may lose out on better cash discounts
• EMI cancellations or refunds can be tricky

Who Should Consider No Cost EMI?

This option suits:

• Salaried professionals making planned purchases
• Buyers who can repay within the tenure without stress
• Shoppers prioritizing immediate possession over maximum discount

How to Calculate the Real Cost of No Cost EMI?

Do a quick manual check:

1. Compare the No Cost EMI price with the full upfront payment price.
2. Check for hidden charges like processing fees.

What Are Some Common Myths About No Cost EMI?

• Myth: “It’s always cheaper.” → Not true; sometimes paying upfront is better.
• Myth: “It’s for all products.” → Availability depends on bank–merchant tie-ups.

How to Avail No Cost EMI in India?

• Choose an eligible product and select “No Cost EMI” at checkout.
• Ensure your card or account supports the scheme.
• Review terms carefully before confirming.

Conclusion

No Cost EMI can be a smart tool if used wisely — especially for planned purchases where paying the full price upfront isn’t feasible. However, like all “too good to be true” offers, the trick is to look beyond the headline and understand the fine print.

Always compare with upfront discounts and use tools like Quicklend’s Learning Hub to stay informed.

This is general guidance. For personalized loan advice, contact our team at Quicklend.