A Short Guide on Zero Interest EMI
What Are EMIs?
People these days are fond of buying new things. However, they love to pay the exact amount and that too in easy installments. Easy installments mean that the selling price or the marked price will be divided into equal parts. These equal parts are to be paid by the customer in installments on every month. There happens to be a particular date on which the amount of the installment amount is to be paid by the customers. Some dealers might also ask for a down payment. And only after receiving that amount they would allow the customer to get an easy installment on that particular product. Besides, there are few factors that decide whether a person is qualified for getting an EMI as calculated using an EMI calculator. The most important criterion is employment. It can be a service or any other professions. But, that person has to have a steady source of income.
Calculation of Zero Interest EMI Scheme
A product is also required to be qualified to be calculated using EMI calculator. The most important of which is that the product should cost something that is above the minimum price as set by the financial organization providing the buyer with the EMI facility. However, in case of zero interest schemes, there are a number of advantages of an EMI calculator, thus making it a convincing buy. Discounts from retailers take the foremost position in the qualifying factors of a zero EMI. Now, a little cut in the profit margin helps the retailer to reach the bulk of the customers. That is a good profit to the retailer. Also, there is a minor processing fee that is being paid by the customers and the amount does not get added to the EMI as calculated using an EMI calculator. But, it adds on to the amount that is received by the financial institution from the customer. It is simply a one-time investment at the time of purchasing. Also, the customers are being given a condition of making a down payment before the purchase. And along with that, the discount that is provided by the retailer is also subtracted from the total purchase amount. This, in turn, lowers the actual loan amount. The remaining of the amount is then divided by the tenure of the loan, thus generating a particular amount that is required to be paid by the buyer.
There are many benefits of getting an EMI. One can easily make a profit by paying the amount that is being charged by an EMI calculator. This is because if a buyer purchases a good for certain bucks then he is required to pay some percentage as the down payment of that good. Thereby saving the rest of the money for the time being. From the next month, the person is required to pay a very convincing amount as calculated by an EMI calculator to the financial institution which has given him the facility of paying in parts. But the main catch is, it incurs huge profit for the financial institutions as it caters to high nominal annualized percentage return every year. It has been found that even if there is no discount from the retailer’s end then also there is a profit for the financial institutions since the down payment and processing fee is a mandatory criterion. The rest of the calculation, however, remains the same. The remaining loan amount is again divided by the tenure and a particular amount is generated which is required to be paid by the buyer each month. In both the cases, there is a high nominal annualized percentage return for the company. Thus, incurring high profit.
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