EMI vs Full payment - Which is better?

by loungelover 2d ago 562 views 8 replies
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loungelover OP
2d ago

I can afford to pay full amount but vendors are pushing for EMI. Claims include:

  • "No cost EMI sir, same price"
  • "Better for credit score"
  • "You can invest the remaining"

    • Is no-cost EMI really free? Should I use it?

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    8 Comments

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    financewhiz · 2d ago

    Great question! Let me break it down:

    "No-cost EMI" Truth:
  • Usually NOT actually no-cost
  • Discount is removed when you choose EMI
  • Processing fees may apply
  • You lose card rewards on EMI transactions
    • Credit Score:
  • EMI shows as ongoing debt
  • Increases credit utilization
  • May slightly affect new loan applications
    • The "Invest" Argument:
  • Only works if returns > actual EMI cost
  • Risk of spending the "extra" money
  • Mental accounting trap
    • My Recommendation: Pay full if you can. Only use EMI if:
  • 0% processing fee confirmed
  • Same price as cash/full payment (verify!)
  • Big purchase affecting utilization
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    R
    rewardhunter · 2d ago

    Also - banks love EMI because they earn from merchants. That's why they push it.

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    C
    cardmaster · 2d ago

    I only use EMI for electronics where I've price-matched against cash. 9/10 times full pay wins.

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    rewardhunter · 2d ago

    Lost 10X SmartBuy points once because I chose EMI by mistake. Costly lesson!

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    C
    cardmaster · 2d ago

    The 'invest the difference' argument only works if you're disciplined. Most aren't.

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