Difference between Renovation Loans and Interest Free EMIs

This is a classic case which first needs introduction and then a frank laying down of facts whether you are in Delhi, Kolkata or Chennai. While there is no right or wrong options and cases might differ between different goods, it is always good to know the logic behind each and judge for ourselves which is the best one.

We are a consumerist society and each trend and fashion impels us to make purchases which makes our lives comfortable and luxurious. Be it a new TV, bigger TV, intelligent fridge, washing machine, home theatre or all of these together. Disposable incomes have never been higher and this is what fuels the economy of the country. For manufacturers to produce, retailers to sell and consumers to purchase. The circle goes on…

While we all have disposable incomes, we might not be able to spend big amounts at a single go. Read a good article on this called 'the financial implications of making my house...my way'. But we are confident that we can afford a brand if there was external help. We can easily pay off a loan and the lending and borrowing of money is one of the pillars of our financial economy. Ergo banks have made it easier for consumers to finance their purchases through Renovation Loans. Apply for one here. These loans are unsecured debts which banks advance based on a person’s financial eligibility. A person with a good credit record and ability to pay back can have easy and instant access to Renovation Loan. What is more they can also get a good rate of interest. Learn more about low interest rate here!!

The other option extended by banks and financial institutions directly through the retailer is something called interest free EMIs. So when you buy a product you have the option of giving PDC’s to the retailer for a certain tenure to pay the price of the product in EMIs. This is a fixed EMI amounting to something more than the MRP of the product.

Now for comparison we need to know that most retailers are asked to pay a 7% charge by the institution they are working with to extend an interest free EMI facility. This is added directly to the price of the product you are buying as the retailer does not want it to affect his profits. This is lower than the interest rate on a Renovation Loan but you have to consider that this is a flat rate which actually amounts to 12% on a normal rule of diminishing principal.

If we add another factor and say that another retailer is offering the same product at a 10% discount but only on full payment the equation becomes complicated. Taking a Renovation Loan at a 16% interest rate on 90% of the MRP as compared to taking an EMI for 112% of the MRP. Think about it and visit an aggregation site to know your best deal via Renovation Loans.