Many online and offline retail stores offer No Cost EMI or Zero Cost EMI on mobile phones and other electronic appliances as the festive season approaches. As soon as you hear about Zero Cost EMIs, you are always tempted to buy a short-term personal loan since you don’t have to bear any additional costs, and you can manage your cash flow by paying off the amount through small EMIs. The next step is to understand how this business operates.
Online and offline retailers usually partner with Financial Institutions that provide Consumer Durable Loans for electronic appliances, etc. Although these kinds of loans are marketed as Zero Cost Loans, their actual ROI ranges differently.
You should compare personal loans on several parameters to find out which is better suited for you. Some of the factors to consider are:
- Rate of Interest
- Amount of the loan
- Tenor
- Fees and charges
The features and benefits of each product differ, so you should compare them based on your needs and suitability before choosing. Vendors’ flexible loans have varying minimum interest rates depending on the type of short term personal loan taken out.
However, it is still important to remember that the interest rate will be determined mainly by the applicant’s credit history and how well they meet the eligibility criteria requirements. An applicant with a good credit score and a decent income can negotiate for minimum interest rates if they provide all the documents required for a personal loan.
Flexi loans are not subject to interest rates on their pre-sanctioned amounts. The rate applies only to funds withdrawn from the Flexi loan account following one’s financial needs. A pre-approved withdrawal limit of Rs.10 lakh is only withdrawn at various points in time by an individual with a pre-approved withdrawal limit of Rs.10 lakh.
Since the loan will be calculated based on Rs.10 lakh, the interest rate will be lower than traditional personal loans. When individuals receive additional funds in their accounts, they may choose to prepay part of the Flexi loan and the other personal loan repayment terms.
As a result, they pay a nominal part-prepayment fee to this financial institution for their part-prepayment facility. The result is that individuals can part-prepay their loans to reduce the end tenor of their loan and eventually reduce their interest payments. An individual must, however, meet the following eligibility criteria to qualify for a Flexi loan with an affordable rate of interest:
- Interested applicants need to be Indian citizens and residents.
- It is recommended that they be between 21 and 67 years old.
- The candidate should be either employed or self-employed.
- To earn a living, salaried professionals should work in either the public or private sector.
This kind of loan comes in handy when individuals need to borrow funds according to their financial needs and avoid applying for multiple loans simultaneously.