‘If you think nobody cares if you’re alive, try missing a couple of car payments.’
This Earl Wilson quote from yesteryear makes us chuckle, but is so relevant in the present context. We are being constantly bombarded by various ways and means to enjoy life to the fullest. This has left us permanently wondering how we can manage to afford all the appliances, services or assets that we wish to own.
The one solution to all your problems? Buy Now, Pay Later.
Money is your modern-day genie. It is quite literally the currency that can fulfil your pleasures and needs like travel, vacation, surgery, home, home renovation, business needs and even just daily groceries. When you do not wish to defer the ownership of product or service, but find it hard to pay that up front, you go down the debt route.
Going further, let’s focus on the ‘pay later’ bit. Generally, this part of the promise is made by you to the company enabling you to ‘Buy Now’. You usually honour this agreement by paying in parts for a fixed period of time. However, do you understand how this sum is calculated? What proportion of it is being paid towards the principal? How much interest do you actually end up paying? Would it be beneficial for you if you end up paying a part of it earlier?
Let us try to understand the concept of EMI and the amortization chart. If you know basic excel, you would be able to perform a short DIY session to see if you have understood the concept.
Open up Excel to calculate the EMIs for this transaction. Use the formula PMT.
Mandatory: Rate (R), Nper (N), PV (P)
Optional: [fv], [type]
EMI * 12 = ₹8,884.88 * 12 = ₹1,06,618.55
Kevin does some quick math and realizes that he borrowed a lakh rupees and is paying ₹6,618.55 as total interest. Why is he not paying 12% of Rs. 1 Lakh, which is definitely ₹12,000? Is Gru being nice to him for the services he provides in the evil factory?
This explanation brings a halo of understanding over Kevin’s head. The concept of EMIs isn’t hard to grasp, but it is always better to understand the deal before you say, buy a mobile phone on easy EMIs from Finserv MARKETS. With this hassle-free financing option, you can choose Finserv MARKETS for anything, from mobile phone loans to home theatre system loans across a network of more than 43,000 merchants across India.