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"Interest-free EMI" or "no-cost EMI" is the most popular retail financing option in India on Amazon, Flipkart, and via credit cards. But is it actually interest-free?

What it really means:

A normal interest (12-18%) is charged by the bank on the amount loaned but is subvented by interest paid by the merchant (or the bank). You simply pay back the principal in EMIs. But this cost ends up being charged to you in disguise.

The hidden truths:

• The price of the product can be higher under EMI than cash payments (missed discount).
• GST on interest could be due.
• You may be charged processing fees, late fees, and lock-in fees.
• It boosts your credit card utilization & impacts your CIBIL score if not paid on time.

Financial experts recommend checking the total cost vs. cash price before going for No-Cost EMI. It's a good option for large purchases if you're disciplined, but not "free." Always read the fine print!