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What's the catch with 0% interest EMIs?

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ChurningNoob

ChurningNoob

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I need to make my tuition fee payment every 6 months and there is an option to choose Zest payment which offers 0% interest rate on the fee.

I have never taken or used such apps or sites for no cost EMIs so I am wondering what is the catch here? Is there anything I should be aware of? Zest will return the interest in the form of cashback.

Is it better to pay with Zest or just used my savings to pay the fee?
 
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ChurningNoob said:
I need to make my tuition fee payment every 6 months and there is an option to choose Zest payment which offers 0% interest rate on the fee.

I have never taken or used such apps or sites for no cost EMIs so I am wondering what is the catch here? Is there anything I should be aware of? Zest will return the interest in the form of cashback.

Is it better to pay with Zest or just used my savings to pay the fee?
Click to expand...
I suggest you to pay with your savings it's possible
 
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anirbanm said:
I have used HDFC no cost previously and thwy are safe

Even Bajaj is not safe ... They do weird stuff (confirmed by multiple people) ... Hence I keep saying that a relationship with HDFC always helps ... They are not problematic like Axis/ICICI
Click to expand...
But.....they do charge processing fees right...? My brother had once purchased a phone on no cost emi... he was charged processing fees for it by Hdfc (Millenia Debit Card)
 
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ChurningNoob said:
I need to make my tuition fee payment every 6 months and there is an option to choose Zest payment which offers 0% interest rate on the fee.

I have never taken or used such apps or sites for no cost EMIs so I am wondering what is the catch here? Is there anything I should be aware of? Zest will return the interest in the form of cashback.

Is it better to pay with Zest or just used my savings to pay the fee?
Click to expand...
I would suggest you not to get into the EMI trap (0% or whatever), only avail the products/services which you can actually pay for. Follow the same strategy for CCs too (secured/unsecured), and you will thank me later! 😬
 
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007 said:
I would suggest you not to get into the EMI trap (0% or whatever), only avail the products/services which you can actually pay for. Follow the same strategy for CCs too (secured/unsecured), and you will thank me later! 😬
Click to expand...
Thanks, actually it is not that I cannot afford it. Just would have to use it from my savings so I thought if BNPL actually helps I could keep that investments for longer period. Time to break my investments/.
 
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ChurningNoob said:
Thanks, actually it is not that I cannot afford it. Just would have to use it from my savings so I thought if BNPL actually helps I could keep that investments for longer period. Time to break my investments/.
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You saved that money to use when in need, right? 👀 This is the right time I believe.
But if you think that you shouldn't use your savings and you see other benefits or in some sort of emergency/urgency which I can't comprehend please go ahead and use BNPL!
 
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You can opt for the EMI option, just keep in mind these things:
1. Processing fee: If you're comfortable with it, fine. (Your case has nil processing fee, so this is fine)
2. Time of conversion: If the EMI is done on the first day of your billing cycle, the first instalment is charged on the the last day. Hence, you need to time the conversion to EMI in order to minimise the first month interest.
3. Banks/BNPL companies refunds the interest in the form of cashback, however, you do have to pay the GST on interest from your pocket. So in case you're getting 5000 as the 0% interest cashback, you'll have to pay 900 rupees in total, in addition to whatever you pay. Seems trivial, but your call.
 
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In most cases, EMIs come with GST as well. So, you pay 18% extra with every EMI. Also, as some people say , processing fee.
While most banks have that fee ranging from Rs 99/- to 199/-, Axis Bank charges 1% of the transaction value
 
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Nothing is zero cost really. It could have been a win-win if there were no processing fees and no GST. You should decide if you’re fine with the interest rate you’re being charged.
 
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talkwithfino said:
But.....they do charge processing fees right...? My brother had once purchased a phone on no cost emi... he was charged processing fees for it by Hdfc (Millenia Debit Card)
Click to expand...
As they charge processing fee and also you have to pay GST on your interest component from your pocket it will not be part of any 0% interest emi offer
 
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