EMIs are used to pay off both interest and principal each month so that over a specified number of years, the loan is paid off in full. Understanding the interest rates, hidden charges, and the total cost of the phone when paid on EMI is crucial.
By dividing the purchase into manageable installments, purchasing a mobile phone on EMI can be a wise method to stretch the expense of a new phone over time and make it more reasonable. However, there are a few crucial things to think about before you swipe your card.
EMI stands for Equated Monthly Instalment. It is a set payment that a borrower makes to a lender on a certain calendar month at a predetermined date. EMIs are used to pay both principal and interest together each month, with the goal of fully repaying the loan over a certain number of years.
Loans of all kinds, including personal, housing, auto, and consumer durable loans for air conditioners, cellphones, etc., are frequently taken out with equal monthly installments (EMIs).
Buying a smartphone on EMI worth it?
It is essential to comprehend interest rates, additional fees, and the phone's entire cost when paid for in installments. Understanding the terms and circumstances is crucial. You may avoid financial mistakes and make better informed decisions by considering these factors.
Here are five mistakes to avoid when buying a mobile phone on EMI in India:
1. Not doing price comparison shopping: Mobile phone EMI finance is provided by a number of different lenders and merchants. Before choosing a loan, it's crucial to browse around and evaluate conditions, processing fees, and interest rates.
2. Not taking your budget into account: It's not necessary to finance a phone on an EMI just because you can afford to. When you're planning your budget for a new phone, be sure to account for the entire cost of the loan, including interest and fees.
3. Ignoring the fine print: Carefully study any loan agreement's fine print before signing it. Recognise the interest rate, processing costs, and any other expenses that could be necessary. Carefully read the terms and conditions. This covers the length of the EMI plan, the option to pay ahead of time without incurring penalties, and any terms that could be applicable in the event that you miss a payment.
4. Extending the loan term for a lower monthly payment: While it may be tempting to extend the loan term to get a lower monthly payment, this will also mean you’ll end up paying more interest overall.
5. Ignoring insurance: You will still be liable for loan repayment if your phone is lost, stolen, or broken while you are financing it. Take into account purchasing phone insurance to shield yourself from these unforeseen expenses.
By considering these factors, you can make a better-informed choice and make sure that purchasing a mobile phone on EMI is an affordable and practical choice free from any financial problems.
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