What’s No Value EMI and How Does it Work? – LoanTap

Revealed on : October 10, 2023

No Value EMI is a well-liked and consumer-friendly financing possibility that has gained vital recognition in recent times. It permits people to make purchases with out incurring any curiosity prices or processing charges, spreading the price of a product over a number of months. This monetary mechanism has revolutionised the best way individuals store for high-value objects, comparable to electronics, home equipment, and even journey packages. Right here, we’ll get into the main points ofand discover the way it works, shedding mild on its advantages and eligibility standards. Understanding No Value EMI might help you make extra knowledgeable monetary selections.

What’s No Value EMI?

No Value EMI is a financing possibility that permits customers to distribute the price of a purchase order over a number of months with out incurring any extra curiosity prices or processing charges. It’s a widespread providing by retailers and monetary establishments, making high-value objects extra reasonably priced for consumers. Below this scheme, the whole value is split into equal month-to-month funds, making budgeting simpler. Nonetheless, it’s essential to notice that the time period “No Value” could be barely deceptive, because the product’s worth is perhaps barely increased to cowl the curiosity value absorbed by the vendor or lender. This strategy has develop into fashionable for its comfort and suppleness, enabling people to make vital purchases with out a substantial upfront fee.

How Does No Value EMI Work?

The no-cost EMI scheme allows debtors to repay their private loans by equal instalments over a predetermined interval, all with out incurring any curiosity prices. To entry this scheme, the borrower could also be required to make an preliminary fee, which could be settled both as a one-time lump sum through the software course of or as a part of the month-to-month instalment funds.

There exist two major classes of no-cost EMIs:

After we speak about no-cost EMIs, there are two main classes that’s defined under. 

Equating Low cost to Curiosity on EMI

On this strategy, the seller removes any low cost part from the product’s worth for these choosing the no-cost EMI. For example, if a product is obtainable at a reduced charge to common clients, no-cost EMI candidates will buy it at its normal worth.

Instalments with Constructed-In Curiosity

This model of the no-cost EMI permits clients to distribute the curiosity quantity throughout their EMIs in equal instalments over the mortgage’s period. Banks, non-banking monetary firms (NBFCs), and numerous monetary establishments prolong this kind of low cost to simplify the borrowing course of for his or her clients.

Advantages of No-Value EMIs

  • Curiosity funds usually are not a direct obligation for customers who avail of this service.
  • Usually, the charges associated to processing or documentation are very nominal.
  • This service is well accessible to many lenders.
  • Choosing a restricted variety of smaller, no-cost loans has the potential to reinforce your credit standing so long as you meet your reimbursement obligations punctually.

Cons of No-Value EMIs

  • As talked about beforehand, consultants concur that almost all of so-called no-cost EMI schemes are deceptive because the curiosity part is commonly covertly embedded throughout the EMI, usually throughout the processing price.
  • Within the occasion that clients fail to fulfill their month-to-month obligations, they could discover themselves paying greater than the initially agreed-upon quantity as a consequence of late prices and taxes.
  • Clients are sometimes unaware of the exact prices their bank card will incur till after the acquisition, doubtlessly leading to unwelcome surprises on their bank card statements.

Elements To Contemplate Whereas Opting For No-Value EMI

Hidden Processing Charges

The enticing no-cost EMI scheme, broadly supplied by quite a few banks, comes with hid prices. Clients could encounter a processing price, which might quantity to as a lot as Rs. 500. This price typically stays unmentioned within the supply and should catch clients abruptly.

Non permanent Credit score Restrict Discount

A prerequisite for availing a no-cost EMI is a minimal credit score rating of 700. Moreover, people should guarantee they possess the required funds to fulfill their month-to-month reimbursement commitments. Understanding the perfect mortgage tenure is essential, as excellent funds may affect future credit score accessibility.

The Peril of Indebtedness

The benefit of entry to financing choices has elevated impulsive spending for a lot of. It’s not possible to recognise the potential elements which may result in a cycle of debt. A normal guideline is that in case your cumulative EMI funds surpass 50% of your earnings, it’s advisable to pause and reassess your monetary state of affairs.

Punctuality in Repayments

Well timed EMI funds are of paramount significance for each purchaser. Should you aren’t making well timed funds, it may well negatively influence your credit score rating, which is essential when searching for private loans. Furthermore, late charges could also be imposed for failing to stick to EMI deadlines.


The idea of No Value EMI has redefined the best way people make vital purchases, providing a versatile and accessible financing possibility. Whereas it guarantees to be interest-free, it’s essential to stay vigilant about hidden prices, comparable to processing charges, which may be included. Moreover, the influence on credit score scores and the potential for impulsive spending must be rigorously thought of. No Value EMI schemes is usually a priceless software for accountable and knowledgeable customers, serving to them unfold the monetary burden of their purchases with out the burden of exorbitant curiosity prices. To benefit from this financing possibility, customers ought to conduct due diligence, handle their repayments diligently, and assess its compatibility with their monetary targets.