For many people, making a major purchase can be a daunting task. The cost, the quality, and the payment options are all factors that need to be considered. One such factor that often comes into play is the mode of payment.
When it comes to purchasing products, people usually have two options - pay through EMI or make full payment. EMI stands for Equated Monthly Installment, and it is a mode of payment that allows you to pay for the product in installments over a period of time. Full payment, on the other hand, means you pay the entire amount upfront, without spreading the payment over a period of time.
EMI vs Full Payment - which one is the better option? The answer to that question is not simple - it depends on your financial situation and priorities. In this article, we will explore both EMI and Full Payment options, its advantages, disadvantages, and how to choose the right payment method for you.
EMI: An Overview
EMI or Equated Monthly Installment is a payment option that has become increasingly popular in recent times. It is mainly used for purchases of high-priced items such as gadgets, electronics, automotive, appliances, and other products that are heavy on the pocket.
The EMI amount depends on the product's cost and the duration of the installment period. It is usually calculated using interest rates, and sometimes, processing fees may be applied. The amount is spread over a period of time, usually six months to two years, with the customer having to pay a fixed amount every month.
Advantages of EMI
One of the primary advantages of EMI is that it allows you to make purchases that you may not have been able to afford otherwise. The payment is spread over a period of time, and so, it is easier to manage compared to making full payment upfront.
EMI is also convenient for those who are on a tight budget. Instead of having to pay for the product in one go, they can pay for it over a period of time that suits their budget. One such popular BNPL method is the Bajaj Finserv Insta EMI Card that offers a pre-approved loan amount of Rs. 3 lakh for cardholders. The card allows users to make purchases online or in-store and convert the payment into interest-free EMIs (Equated Monthly Installments). Users can avail the pre-approved amount and payback in easy monthly installments, without paying any interest amount.Another advantage of EMI is that it can help you build your credit score. Making regular payments on time can positively impact your credit score, which can help you secure loans or credit cards in the future.
Disadvantages of EMI
The biggest disadvantage of EMI is that it comes with an interest rate. You end up paying more than the actual cost of the product. Sometimes, processing fees may also be applied, which can increase the cost further.The longer the EMI payment period, the higher the interest rate applied, which means you end up paying more in the long run. Customers may also end up trading quality for cost due to the ability of EMI to make costly products affordable for the time being.
Full Payment: An Overview
Full payment is exactly what it sounds like - you pay for the product in full, without spreading the payment over a period of time. It is a common payment option for smaller purchases and can be opted over EMI if you're in a position to make the payment in full upfront.
Advantages of Full Payment
The primary advantage of full payment is that it is cost-effective. You do not pay any interest or processing fees, which means you end up paying the actual cost of the product. This can help you save money in the long run.Full payment is also a good option for those who do not want to worry about making monthly installments. Once the payment has been made, you can forget about it and enjoy your purchase.
Disadvantages of Full Payment
The biggest disadvantage of full payment is that it may be unavailable at times, especially for high-priced products. Customers may not have the funds to make the full payment upfront and may need to rely on EMI. Moreover, it may not be a viable option for customers on tight budgets due to the inaccessibility of large amounts of funds.
How to Choose the Right Payment Method for You
When it comes to choosing between EMI and full payment, the key is to consider your financial situation and priorities. Here are a few factors to consider before making your decision:
1. Budget - If you are on a tight budget and cannot afford to make the full payment upfront, EMI is the better option. However, if you have the funds to make full payment, it is a better option to save money in the long run.
2. Interest rates - When choosing EMI, it is important to consider the interest rate applied and calculate how much you will end up paying in the long run.
3. Credit Score - If improving your credit score is a priority, EMI can help you achieve that. Make sure to keep up with regular payments to have a positive impact on your score.
Reliance Digital EMI
Reliance Digital is a retail brand that offers a wide range of electronics and appliances at competitive prices. Their EMI payment options are popular among customers, especially for high-priced items. Customers can choose from various EMI plans with interest rates ranging from as low as 0%, depending on the product and the payment plan.
Financial Planning
When it comes to making major purchases, it is essential to have a solid financial plan in place. Before making any big purchase, consider your financial goals, budget, and spending habits. Planning ahead can help you avoid getting into debt and make purchases that truly align with your financial priorities.
Final Thoughts
Choosing between EMI and full payment can be a confusing task. It is important to consider your financial situation, priorities, and goals before making a decision. Remember, EMI is a good option for those on tight budgets or those who want to improve their credit score, while full payment can help you save money in the long run.