What is a Zero Cost EMI & What are its Advantages and Disadvantages?


The term “Zero-cost EMI” refers to an offer in which you can pay for a product or service in manageable monthly installments without being charged any additional fees. This indicates that you will not be liable for paying any additional fees in addition to the product’s total price. Flipkart first introduced the ‘Zero Cost EMI’ payment method, followed by other e-commerce websites like Amazon India, which also joined the fray. This payment method allows customers to purchase expensive items online monthly instead of paying the entire price on the spot.

With the help of this ‘Zero Cost EMI’ scheme, consumers can buy high-value items online and the amount in the form of EMI with zero percent interest rate, thus reducing the burden of paying a large sum of cash upfront. Customers can use this payment method to purchase expensive items online through monthly installment payments rather than paying the entire price upfront.

Advantages of zero-cost EMI

For various reasons, online merchants offer No Cost EMI in their tie-ups with major national banks.

  • One of the greatest advantages of the zero-cost EMI scheme is the ability to purchase expensive products without paying them upfront.
  • A flexible tenor will allow you to choose the tenor based on the budget you have every month.
  • The ability to pay for the same amount in instalments helps plan better future budgets

Disadvantages of zero-cost EMI

  • It is more expensive to pay EMIs than to pay the full amount at once
  • The EMI may come with a fixed, non-refundable processing fee that you have to pay.
  • The interest that will be payable to you will be subject to GST

How is the zero-cost EMI different from regular EMI?

One of the major differences between paying for a product through regular EMIs is that your EMI is composed of both the interest and the processing fees. However, if you choose to pay EMIs without any interest charge, you can convert the price of your product into interest-free EMIs.

What is the Reserve Bank of India’s position on zero-cost EMIs?

The Reserve Bank of India has issued stringent guidelines to financial institutions in India regarding the provision of No Cost EMI. According to the Reserve Bank of India (RBI), the idea of ” No Cost EMI ” does not exist because banks already charge interest in the form of processing fees, and sometimes retailers add the interest amount to the price of the product, which is not a fair practice and is just another marketing gimmick. As a result, many reputable financial institutions collect the interest monthly and provide the customer with payback or an immediate discount upfront.

Should you opt for a zero-cost EMI offer when purchasing a product?

Most of the time, “Zero Cost EMI” refers to a marketing strategy. However, because numerous shops and online platforms consistently sell products with zero cost EMI, you will likely become persuaded to purchase the product to take advantage of the offer.

Because of marketing gimmicks, most people purchase a product they do not require, even when they fall for these tricks. Therefore, before deciding to buy the thing, it is essential to ascertain whether or not you require the item. In addition, you need to make sure that you read the terms and conditions to be aware of any hidden fees that might not be disclosed immediately.

The probability that you will end up paying a higher total price when using Zero Cost EMI is significantly higher than paying cash for the item. As a result, you need to evaluate whether or not the product is worth the additional cost you are paying.

Before choosing an EMI plan with zero interest, it is a good idea to do some research first. Check the prices offered by other vendors for the same product, the processing fee, and any additional fees that might be concealed. It is a better deal if the financial institution truly offers the credit with zero cost EMI. You should not choose a No Cost EMI, however, if you know that it is a marketing play or if your requirement for the product can be postponed until you have saved enough money to pay for it in full with cash.


You can purchase the product with No cost EMI if you are certain you need it and can pay the EMI every month. However, there is no point in paying more than what you could have paid in the first place if you are unsure of either purchase and had to consider the purchase on an impulse.

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