6 Advantages and Disadvantages of EMIs

Monthly Equated Installments or EMI has simplified life and made buying a more comprehensive concept. The fact is that even an ordinary person is aware that expensive utilities become affordable with the EMI option. The EMI option empowers an individual to buy anything using his repayment capacity. The lender companies have leveraged payment options making things more straightforward. The borrowers can effectively calculate the monthly installments and decide wisely without impacting their monthly expenses. 

Once you choose the EMI option for repaying the borrowed amount, it comprises the principal amount and the interest. EMI offers include exclusive deals, which come as a boon for many who cannot afford expensive products. However, there are certain advantages and disadvantages connected with EMI payments and options. Here are a few of them pointed out for you to consider while purchasing products on EMI.

Advantages of EMIs

• Easy to Avail: EMI options are easy to avail while purchasing your favorite products. All you need to do is decide on the product and choose the EMI payment option while checking out. Ensure to check for eligibility details while opting for EMI.
• Flexible payments: When you select the EMI option, you can decide on the amount depending on payment tenure. The individual calculates the amount to be paid every month without disrupting his monthly commitments. 
• Affordability: The expensive products that can only be dreamt of becoming a reality with the EMI option. Customers are now empowered to buy anything they want, be it an appliance, a gadget, or a house. Every dream becomes a reality for an ordinary man with easy monthly payments.
• Easy on Pockets: some products or needs will likely exhaust your savings significantly. Repaying the borrowed amount through easy installments allows you to save while spending.
• Direct payments: Since no third party is involved, paying the EMI directly to the lending company becomes convenient.
• No-cost EMIs: Several banks offer you 0% interest on the purchased product while choosing the EMI options to repay the borrowed amount. 

Several offline retail stores enable customers to convert payments into EMIs using the POS machine. Some cardless EMI options empower the customers to easily convert their payment amounts into EMIs without using their Debit or Credit cards. The POS machine charges 0% processing fees making payments a hassle-free affair.

Disadvantages of EMIs

• Additional Charges: Several banks and lending institutes often charge processing fees to their customers. Sometimes the interest rates are higher, which impacts the expense since you pay extra than the actual amount for the product.
• Penalties: Banks and NBFCs are particular and strict with repayment terms. If there are any delays in paying the monthly installments, the banks may charge you a penalty. 
• No Pre-closure: Sometimes, the borrowers might ease paying the borrowed amount much earlier than the given duration. The banks and NBFCs might charge you an early repayment fee. 
• Higher repayment: Opt for 0% interest schemes to avoid paying more than the actual product price. The interest rate charged for a particular product and tenure chosen might make you pay slightly higher.
• Effect on credit score: Defaulting your EMI payment will significantly affect your credit score. It will, in turn, lower your eligibility to borrow any other loans in the future.
• Hidden Charges: EMI offers are mesmerizing since they make your dream product a reality. Ensure to check the payment details correctly while choosing the EMI option, and beware of any hidden charges  

Though the EMI is a facility that comes easy on the customer’s pockets, ensure to make necessary considerations while taking the option. Make prior calculations keeping your monthly expenses in mind to make the additional payment easy to be repaid.