In India, when a consumer visits a consumer durables shop to look for their needs, they are almost instantly lured into buying by zero percent finance schemes. An electronic or other could be made affordable even if a consumer is not really having that margin. These schemes are floated by some non-banking finance companies (NBFCs) that state to fund a purchase at zero interest rate.
Paying more than actuals
: Recently, the Reserve Bank Of India (RBI) has announced regulations of these schemes, which has led some NBFCs to withdraw such schemes. However, there are others who are still offering these schemes. The main flaw of such scheme is that the consumer end up paying more than what actually their purchase costed.
Losing on discounts
: By opting to avail zero percent scheme, a consumer might be losing big on cash discounts that he/she could have received in case of full payment. Moreover, the processing fee is inbuilt in such schemes and a consumer does not understand that what all charges go in his EMIs.
Check for genuineness
: Consumers should check if the schemes offered are genuine or not. Take care that a heavy demand during festive rush is not working into your disadvantage.
Real or not
: Before openly announcing about the plan of taking a zero percent scheme, ensure that you are through with some basic questions. Ask the shop owner about any possible discount that you might get in case of full payment. Also, check for transaction and hidden costs on the scheme available at the shop. You can go ahead with these schemes if the distributor responds to the above queries in negative.
Is there really A Zero
: Experts believe that any zero percent scheme does have at least 3% to 5% hidden processing fee. So, in literal sense, it is doubtful if it is really a zero percent scheme.