Buying Phone On EMI? Here’s Why It Isn’t A Wise Idea
In India, the average salaries are low as compared to the other developed economies but people still spend too much on buying electronic gadgets such as smartphones. Considering the fact, many e-commerce websites allow the customers to buy these smartphones on EMIs. Many banks such as SBI, ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd give their customers an option to buy smartphones, electronic gadgets on EMIs.
These EMI can be paid between three to 36 months and is available both on debit and credit cards. The interest rate of these EMIs is in between the range of 12% to 18% per annum. A customer can only opt for the EMIs for items sold by a single seller and the minimum order that can be under EMI is Rs. 3, 000.
But the major point to consider is that the average life of a smartphone is about one year and if the customer plans on buying the smartphone on EMI will it be considered as a good decision or not. Some of the customers fall into the trap spread by the mobile phone companies that want their customers to spend more on buying these expensive smartphones. So, the customers shouldn’t take the bait and the smartphone on EMIs.
For example, if a customer wants to buy an Apple iPhone X (Space Gray, 64 GB) from Flipkart E-commerce site and the price of the smartphone is Rs 85,999. If a customer uses a State Bank of India card then as per the bank’s EMI plan, the interest rate is 14% an annum. The customer will have to pay 14,925 rupees per month and they are supposed to pay the amount for six months. So, the customer will pay Rs 3,551 more towards the bank’s interest and the total price will turn out to be Rs 89,550 even though the original price of the smartphone is Rs 85,999.
That is why it is advisable that the customers avoid buying gadgets on EMI as the interest rate is higher. The most sensible decision a customer can make is to save first and then buy the gadget or try to avoid buying it if he/she can’t afford it in any way. However, those who want to get an electronic item on EMI should research more in order to get better rates.
Try and find the lowest interest rate and also the low tenures as it tends to decrease the price of the gadget even more. Those customers who have already opted for the EMI option should make sure that they do not default on repayment as it eventually will have a negative effect on the credit score. So, the conclusion is the customer should avoid the temptation of spending more than what they can afford and the money saved can be used to achieve more important and essential goals.