Gone are the days when people used to take out their credit cards while shopping. Due to the higher interest rates and complications, this type of card has taken a step back. Now is the time for an EMI card. For many of you who need to be made aware of this card, let me take you down the lane of what it is all about and what it has to offer.
Further, nowadays, EMI card enables you to do shopping on EMI without credit card.
What is an EMI?
Equated Monthly Installment (EMI) is a fixed monthly payment that a borrower has to pay the lender as a part of loan repayment. It comprises both the principal amount and the interest accrued on the loan. It is calculated after taking into consideration factors such as the amount of loan, rate of interest as well as tenure.
What is an EMI card?
It is basically a financial instrument that works as a pre-approved loan used to buy any lifestyle/durable goods. It has become one of the most trending ways to make big purchases in the current era. It can be used to make online as well as offline purchases, and the total amount is paid in monthly instalments, known as EMIs.
What are its pros?
● Minimal documentation
One can apply for this card online or offline. However, it doesn’t matter from which mode you apply; basic and minimal documentation is involved here.
● Flexible Tenure
Any purchase made via this card offers a very flexible repayment tenure. This is generally from three months to two years.
● Pre-approved loan
It comes with a loan amount of Rs 2 lakh.
● Digital Wallet
No need to carry this card everywhere. To buy electronics on EMI, easily use it via the Bajaj Finserv Wallet application.
What are the essential tips for making smart EMI purchases?
● Evaluate finances
For making a smart EMI purchase, evaluating your finances is essential. Take time to assess your income, expenses, and current debts (if any) to get an idea of whether you can afford the monthly EMI payments.
(Tip: Ensure your EMI payments do not exceed 30% of your income.)
● Compare EMI options
Many options are available in the market, and it is very important to compare them before making a decision. Look at the factors such as rate of interest, processing fees, and prepayment charges and choose the best that suits you.
● Opt for shorter tenures
While it is a well-known fact that choosing a long tenure will reduce the EMI payments, it’s now always the best option. This is because longer tenures result in a higher rate of interest, which means you end up paying more.
● Prepayment Options
Opting for an EMI scheme that allows prepayment is always a wise call while doing shopping on emi without credit card. This factor helps reduce the overall interest payment and allows you to close the loan earlier. Also, keep in mind to check for prepayment charges before committing to an EMI scheme.
● Avoid impulse purchase
When you opt to pay via the EMI scheme, remember that it makes expensive purchases seem affordable, which definitely leads to impulse purchases. So, therefore, only opt for such schemes for items you need and can afford.
● Read Fine Print
Before accepting the scheme, it’s important to read the complete fine print. This helps you look for hidden charges, terms, and conditions and understand the consequences of defaulting on monthly payments.