EMIs are no more a Great Option; it’s a Time for ‘Reverse EMIs’
Thanks to the advancing market strategies which have made buyer a ‘king’ who can afford to buy anything that he wish for. Equated Monthly Installments (EMI) is one such methodology that has given buyers today a flexibility to buy any product at his discretion without any hassles of having any considerable savings.EMI, no doubt has been projected as a boon to the budgeted income class who can meet their contingencies and delay the payments with equated monthly installments.
Several propositions have been laid emphasizing EMI an ultimate choice that solves the problems of ‘constrained budgets’ with a blink of eye. But the question arises, Is EMI a great option or just a gimmick? Well, several companies’ turns up with lucrative propositions like Interest-Free EMIs but a fact cannot be ignored ‘Everything comes with a price-tag’. Acquiring a product on EMI is like acquiring a non-cash loan that in no way can be interest free.
The only gimmick that has been played by many companies so far is that they are actually inflating the pricing of a product instead charging an interest over EMI. For example, if you noticed, in case you buy a mobile with an instant cash payment, you receive discounts and cash back which are missing in case you opt for EMI.
So, a buyer is duped on the pretext of interest-free EMI by eliminating the cash back benefits and discount benefits which he/she can receive when make an instant cash benefit. So, the price differential between the total price paid under EMI and the pricing under instant cash payment is quite equivalent to the interest paid over the EMIs.
It has been cleared so far that every consumer needs to pay an interest over EMIs but the quantum is still not validated and it varies from companies to companies. On an average, it has been observed that the interest paid over EMIs varies from 17%-22%. Hence, every purchase financed with EMI is backed with such a hefty interest rate. So, to avoid paying such robust interests, ‘Reverse EMI’ is a gen-next solution.
What is ‘Reverse EMI’ ?
‘Reverse EMI’ is the concept of equating your monthly installments pre-hand i.e. before buying a product and accumulate the finances till the point of purchase so that the buyer can avail various cash backs and discounts that are available over cash payments. Under many circumstances, it has been observed that the pricing of a product deflates over a period of time. So, if you as a buyer who can delay their purchase, Reverse EMI will turn out to be a win-win situation for you. Not just the cash-backs and discounts that you can enjoy under Reverse EMI, you will also enjoy the diminishing pricing benefits of a product over the period of time.
How ‘Reverse EMI’ is better than EMI ?
Two major cost-saving benefits that you derive under Reverse EMI are non-payment of interest and the diminished pricing of the product. For example, if you buy a product today for Rs. 20000/-, you shall be required to pay EMI equivalent to its pricing but if you opt for a cash payment, you shall be lured with various discount schemes and benefits. Say, if 10% promotional discount is offered over making a cash payment then a buyer is benefited with a discount of Rs. 2000/-.
Is reverse EMI Overlapping the Concept of Saving ?
Yes, to an extent ‘Reverse EMI’ is same as the concept of saving. You save a considerable amount every month to fund your future purchase. The only difference between the two is, savings are basically a contingency reserve which can be utilized in the hour of need while Reverse EMIs are created with the virtue of sourcing your particular purchase so that you can save on account of interests or derive cash-payment benefits as a buyer.
When ‘Reverse EMI’ is Feasible ?
Reverse EMI is only feasible when you can delay your purchase for a considerable time. In case, you have an option to post-phone your requirements for a particular product then it is highly recommended to opt for Reverse EMI. Not just you will save on account of interest payments but also you will derive the diminishing price difference of that commodity.
Hence, reverse EMI is no doubt a better option to deal with as the dependency over loans to meet the requirements can be curbed with this Great Methadalogy.
FinTech Blogger of Asia
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