HaatBeat Calculators

Is a "no-cost EMI" really free?

A "no-cost" plan splits a price into equal payments with no interest shown. But if paying upfront would earn a discount, or the plan has a fee, the plan does cost something. See how much, as a yearly rate.

Also known as: Interest-free instalment calculator.

Any currency
₹
The price the instalments add up to.
months
1 to 60 months.
₹
The cash or card discount you give up by choosing the EMI plan. Use 0 if there is none.
₹
Charged when the plan starts. Use 0 if there is none.
Real yearly interest rate
19.2831%

Paying ₹10,000.00 a month for 6 months plus a ₹235.00 fee costs ₹3,235.00 more than paying ₹57,000.00 upfront. That works out to about 19.2831% a year in interest.

EMI plan or paying upfront
Monthly instalment₹10,000.00
Total on the plan, with fees₹60,235.00
Paying upfront₹57,000.00
Extra cost of the plan₹3,235.00
Then change the inputs to compare two options side by side.
Illustrative estimate. Equal instalments at the end of each month and a fee at the start. Late fees, card interest on missed payments and any taxes on interest are not included. Check the plan's full terms.

Calculators behind this question

Beyond the numbers

The maths shows one side. These are the things only you can weigh.

  • Easy to buy more than plannedSmall monthly amounts make bigger purchases feel affordable. Ask whether you would buy the same item if paying in full today.
  • Several plans add upA few small EMIs at once can quietly take a large share of each month's income.
  • Cash flow can still matterSometimes spreading a payment is genuinely helpful, for example when a needed appliance breaks. A small cost for that flexibility can be worth it.
  • Read the fine printFees, foreclosure charges and what happens if a payment is late are all in the terms. A quick read avoids surprises.

How it's calculated

Instalment = price ÷ months Find the monthly rate i where: fee + Σ instalment ÷ (1 + i)ᵏ = price − upfront discount Yearly rate = i × 12

The upfront price is what the goods really cost today. The plan swaps that for a fee now and instalments later; the rate that makes the two equal is the interest you are effectively paying. It is found by search.

Assumptions

  • Equal instalments at the end of each month, and the fee paid at the start.
  • The discount is only available when paying the full amount upfront.
  • Late fees, card interest on missed payments and taxes on interest are not included.

Worked example

A 60,000 rupee phone on a 6-month plan at 10,000 rupees a month, with a 235 rupee processing fee, when paying upfront would get a 3,000 rupee discount: the plan costs 3,235 rupees more than paying 57,000 upfront, about 19.28% a year in interest.

Questions

How can a plan with no interest have a rate?

The interest is often hidden in a lost discount: the seller gives the lender the discount you would otherwise get. Add a processing fee and the plan can cost as much as an ordinary loan.

When is a no-cost EMI genuinely free?

When the price is the same whether you pay upfront or in instalments, and there is no fee. The calculator then shows 0%.

Does it affect my credit record?

An instalment plan is a loan. It appears on your credit record, and missed payments can harm it.

What about GST on the interest?

In some plans tax is charged on the interest the lender earns. If so, add it to the fee.

Sources

How we build and check our calculators