Buying a mobile phone on EMI can be a smart way to spread the cost of a new phone over time, making it more affordable by breaking the payment into manageable instalments. However, before you swipe your card, there are several important factors to consider.
EMI stands for Equated Monthly Instalment. It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month. 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.
Also Read: Here’s Why EMI Payment Timing Matters, Advance Vs Arrear; Know All Differences Here
EMIs are commonly used for various types of loans, including personal loans, home loans, car loans, and consumer durable loans for ACs, mobiles, etc.
Buying Phone On EMI Is Good or Bad?
Understanding the interest rates, hidden charges, and the total cost of the phone when paid on EMI is crucial.
It’s important to be aware of the terms and conditions. Taking these aspects into account will help you make a more informed decision and avoid any financial pitfalls.
Here are five mistakes to avoid when buying a mobile phone on EMI in India:
- Not shopping around for the best deal: Some several different lenders and retailers offer EMI financing on mobile phones. It’s important to shop around and compare interest rates, processing fees, and other terms before you decide on a loan.
- Not considering your budget: Just because you can afford to finance a phone on EMI doesn’t mean you should. Make sure you factor in the total cost of the loan, including interest and fees, when you’re budgeting for a new phone.
- Not reading the fine print: Before you sign any loan agreement, be sure to read the fine print carefully. Understand the interest rate, processing fees, and any other charges that may apply. Read the terms and conditions carefully. This includes the duration of the EMI plan, the flexibility to prepay without penalties, and any conditions that might apply if you miss a payment.
- 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.
- Not getting insurance: If your phone is damaged or stolen while you’re financing it, you’ll still be responsible for paying off the loan. Consider getting phone insurance to protect yourself from these unexpected costs.
Taking these aspects into account will help you make a more informed decision, ensuring that buying a mobile phone on EMI is a convenient and cost-effective option without any financial pitfalls.
