Equated Monthly Installments (EMIs) are a popular choice for those who want to purchase something expensive but do not have the immediate funds to do so. EMIs provide an easier way to buy something costly, by paying for it in installments over a set period of time. Many companies and businesses offer EMIs as a payment option, including travel companies like Make My Trip.
If you are unfamiliar with EMIs, this guide will help you understand everything you need to know about them, including how they work and their advantages and disadvantages.
What are Equated Monthly Installments?
EMIs refer to a monthly payment plan that allows consumers to pay for a product or service over a period of time. The concept of EMIs is simple: instead of paying for the product in a lump sum, you can choose to pay for it in smaller amounts, typically on a monthly basis, until the debt is fully paid off.
For instance, if you want to buy a new laptop worth Rs. 50,000, you can choose to pay for it in a single payment or opt for an EMI plan that could let you pay for it over several months instead. You will have to pay an interest rate, usually dependent on the duration of the EMI payment plan, but this option allows you to spread the cost of your purchase over an extended period.
How Do EMIs Work in India?
EMIs in India work similarly to how they do in other countries. The process begins with the buyer opting for an EMI plan from a particular company or seller. The seller or company then chooses a lending partner or bank to provide funds for the EMI facility.
Once the buyer chooses an EMI option, the lender pays the seller the full amount of the product or service, while the buyer agrees to pay back the lender over a set period of time, together with an interest amount.
In some cases, the interest rate may be higher, depending on the duration of the EMI plan and the seller's lending partner. The buyer may also have to pay a processing fee upfront or monthly charges for the processing of EMIs.
Advantages of EMIs:
One of the significant advantages of EMIs is that they let you buy something expensive without feeling the pinch of an enormous upfront cost. By breaking the payment into smaller, more manageable chunks, EMIs make it easier for you to purchase what you want and reduce your financial burden.
EMIs also allow you to plan your cash flow more efficiently. For example, if you are buying a home appliance or a high-end phone, you can spread out the cost over several months and allocate your savings for other essential expenses.
EMIs ease the pressure of buying something expensive and let you enjoy the benefits of the product or service without affecting your budget significantly.
Disadvantages of EMIs:
One of the primary disadvantages of EMIs is the added interest. If you opt for an EMI plan, you will have to pay a higher amount than the actual price of the product or service due to the interest rate.
Moreover, if you miss or delay a payment, you may have to pay a penalty charge or higher interest than the agreed rate. These additional costs can add up over time, making the EMI plan more expensive than a one-time payment.
Also, not all products or services are available on EMI, so in some cases, you may have to pay the entire cost upfront.
Make My Trip Pay Later: Travel EMIs
Make My Trip, one of the popular travel companies in India, offers a unique Pay Later option, which is essentially an EMI facility. The Pay Later option allows customers to pay for their trip in installments, rather than an upfront lump sum.
Customers booking with Make My Trip can select the Pay Later option at the checkout stage. You will have to fill out a personal loan application and provide the necessary KYC details, and you will be able to view the EMI options available to you.
Customers can avail of the Pay Later option if their trip itinerary costs a minimum of Rs. 5000, but the maximum loan amount may vary based on the seller financing partner's discretion.
Make My Trip Pay Later also charges an interest rate and processing fee, so it is best to compare the costs of the Pay Later option with other financing options before committing to it.
Conclusion:
EMIs are an excellent option for those who want to purchase something expensive but do not have the funds upfront. They let you pay for a product or service over a set period, making it easier and more manageable to meet the costs of what you want.
However, you must be aware of the additional costs associated with EMIs, such as the added interest rate and processing charges. Make sure you do your research and compare the EMI options before deciding on a plan.
If you are considering traveling with Make My Trip, their Pay Later option is a great way to book your trip without worrying about the upfront cost. However, you must evaluate the Pay Later option's costs to ensure that it is the right financing option for you.