Zero per cent finance schemes while buying electronic items or other products is an extremely tempting option, especially as they offer no interest rates and you can pay back the money in installments. Until a few months ago these schemes were very popular. However, the Reserve Bank of India stepped in and decided to regulate these schemes. There are still a few companies that offer these schemes. Here are a few things you should be cautious on before buying these scheme.
While the scheme may offer zero per cent interest rate, there could be a possibility of ancillary charges. These could be as high as three per cent in the form of administrative and processing fees. So, do look out for these charges.
2) Is the price of the product jacked up?
It's highly possible that the price of the product has been jacked up on account of the "zero per cent offer". Check the price of similar products elsewhere. Also, check the price of the same product with another dealer elsewhere.
3) Are you losing on discounts?
If you opt for the "zero" per cent finance scheme, do see if you are losing money on discounts that the dealer may otherwise offer.
4) How much discount would he give if you pay cash down?
Do ask the dealer, how much discount he would give if you were to pay cash down. Instead of a one year EMI, if you get 10 per cent discount, it's worth paying cash down, unless you cannot afford the product.
5) Check if the scheme is regulated by the RBI
As mentioned earlier, the Reserve Bank of India recently came down on "zero per cent" finance schemes. Do check, if the scheme is in compliance with the RBI requirements.
Do exercise some caution before buying such schemes. It's highly possible that without being circumspect, you might end-up paying a higher price.