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                                          No-Cost EMI

What is No-Cost EMI?

No-Cost EMI is a financing scheme offereed by Merchants for Retailers by which you pay the price of the product in equated monthly installments.

How does it work?

Generally, there are 3 parties involved in the transaction, the Manufacturer / Retailer, Bank and the Consumer / Customer.

"One thing we need to understand that neither Manufacturer nor bank, are charitable organisations. They are in the business to make profits."

In the case of No-Cost EMI, the Manufacturer offers a discount that is equivalent to the interest cost (but not to the Consumer / Customer).

Example:

                            Particulars                                        EMI Next Month

                            Price of I-Phone                                80000

                            EMI Tenure                                        6 Months

                            Bank pays to Manufacturer              Rs. 76,835

                            discount given by Mfg. to Bank        Rs. 3165

                            Advance EMI                                      Rs. 13,333

                            Pending EMIs                                     Rs. 13,333 x 5 = 66,665

                            Profit earned by Bank                        Rs. 3165

                            Annual % of profit earned by Bank (IRR) = 20%

By

Wealth Club Indian Team


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