How to use the no-cost EMI calculator
- Enter the price your EMIs add up to and pick the tenure.
- Enter the bank's EMI interest rate from the offer details (often 13–16% a year).
- Add the processing fee before GST.
- If paying in full gets an instant discount, enter it as the discount lost on EMI.
- Read the extra cost, the yearly rate and the month-by-month statement amounts.
How no-cost EMI works
The bank charges its normal EMI interest. To make the EMIs add up to the sticker price, the seller cuts the price by exactly that interest. On a ₹60,000 phone over 6 months at 16% a year, the bank lends ₹57,297 and the seller's discount of ₹2,703 pays the interest.
Extra cost = GST on interest + processing fee with GST + discount lost on EMI
What the discount doesn't cover is the 18% GST on the interest, about ₹487 here, and the processing fee with GST, ₹235. Together that is ₹721, or about 4.1% a year on the money you effectively borrow.
The cost that matters most: a lost discount
Sale offers often give an instant discount only when you pay in full. If paying in full would have saved ₹3,000, the same ₹60,000 EMI costs ₹3,721, which is like borrowing at about 22% a year. Check both prices at checkout before choosing EMI.
₹60,000 on no-cost EMI by tenure
At 16% a year with a ₹199 processing fee and no lost discount. Longer tenures cost more GST in rupees, but the fixed fee is spread over more months.
| Tenure | EMI | Seller's discount | GST on interest | Extra cost | Yearly cost |
|---|---|---|---|---|---|
| 3 months | ₹20,000 | ₹1,565 | ₹282 | ₹517 | 5.2% |
| 6 months | ₹10,000 | ₹2,703 | ₹487 | ₹721 | 4.1% |
| 9 months | ₹6,667 | ₹3,812 | ₹686 | ₹921 | 3.7% |
| 12 months | ₹5,000 | ₹4,892 | ₹881 | ₹1,115 | 3.4% |
Extra cost by purchase amount (6 months)
The fee is the same on every purchase, so a small no-cost EMI can cost more as a rate than a large one.
| Price | GST on interest | Fee with GST | Extra cost | Yearly cost |
|---|---|---|---|---|
| ₹15,000 | ₹122 | ₹235 | ₹356 | 8.2% |
| ₹30,000 | ₹243 | ₹235 | ₹478 | 5.5% |
| ₹60,000 | ₹487 | ₹235 | ₹721 | 4.1% |
| ₹1,00,000 | ₹811 | ₹235 | ₹1,046 | 3.6% |
| ₹1,50,000 | ₹1,217 | ₹235 | ₹1,451 | 3.3% |
Before you choose no-cost EMI
- Compare the price on full payment with the EMI price, including any instant discount.
- Check the processing fee in the EMI offer details; some offers waive it.
- Make sure the full amount fits within your card limit, since it is blocked on day one.
- Pay the full card statement each month: if you carry a balance, card interest of about 40% a year applies.
If you are already carrying a card balance, see what it costs on the credit card interest calculator.
Frequently asked questions
Is no-cost EMI really free?
Not quite. The seller gives a discount equal to the bank's interest, so the interest itself is covered, but you pay 18% GST on that interest and a processing fee with GST. On a ₹60,000 purchase over 6 months that is about ₹721. If choosing EMI also means losing an instant discount, the cost is higher.
How does no-cost EMI work?
The bank charges its normal EMI interest, but on a lower amount. For a ₹60,000 phone over 6 months at 16%, the seller cuts the price to about ₹57,297; the bank lends that, and with interest your six EMIs add up to ₹60,000.
Why is GST charged on no-cost EMI?
Interest on a card EMI is a financial service, and the bank must add 18% GST to it. The seller's discount pays the interest, not the GST, so the GST appears on your card statement each month.
What processing fee do banks charge for no-cost EMI?
Often ₹99 to ₹299 per purchase, or about 1% of the amount, plus 18% GST. Some offers waive it. Because the fee is fixed, it matters most on small purchases.
Is no-cost EMI better than paying in full?
If paying in full gets the same price, the difference is small: the GST and the fee, partly offset by the interest your money earns while it stays in your account. If paying in full gets an extra instant discount, paying in full is usually cheaper.
Does no-cost EMI affect my credit score?
The full price is blocked on your card limit from day one, which raises your credit utilisation until the EMIs are paid. Paying every EMI on time does not hurt your score; a missed one can, and it attracts card interest and a late fee.
Can I close a no-cost EMI early?
Usually yes, but the seller's discount was given for the full tenure. Closing early often brings a foreclosure charge of about 3% of what is left, with GST, and some banks recover the interest the discount covered. Check your card's EMI terms.