Real-Cost-of-No-Cost-EMI

The "Real Cost of No Cost EMI" is often misunderstood. Although marketed as zero-interest, it typically involves hidden costs. Retailers or financial institutions may inflate the product price to cover the interest or processing fees. Sometimes, discounts available on upfront payments are not offered on no-cost EMI purchases, leading to higher effective costs. Additionally, processing fees might still be charged separately. Therefore, while the EMI appears interest-free, the actual expenses can be similar to or even higher than regular EMI schemes. Consumers should carefully review the terms to understand the true financial impact.

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This code snippet calculates the Equated Monthly Installment (EMI) for a loan or purchase, taking into account various discounts and fees. Here's a breakdown of each step and what it does:

Calculate Total Discounts:

const totalDiscounts = couponDiscount + commonDiscount + nonEmiDiscount + emiPaymentDiscount + noCostEmiDiscount;

• totalDiscounts is the sum of all the different discounts available. These can include:
  • couponDiscount: Discount from a coupon.
  • commonDiscount: Any general discount.
  • nonEmiDiscount: Discount applicable if not opting for EMI.
  • emiPaymentDiscount: Discount specifically for choosing the EMI payment method.
  • noCostEmiDiscount: Discount if opting for a no-cost EMI scheme.

Calculate Principal Amount:

const principal = realCost - totalDiscounts + processingFees;

• principal is the net amount that needs to be financed through EMI.
• realCost: The original cost of the product or loan amount.
• totalDiscounts: The total of all applicable discounts, calculated in the previous step.
• processingFees: Additional fees charged for processing the EMI.

Calculate EMI:

const emi = principal / tenure;

• emi is the monthly installment amount.
• principal: The net amount to be financed.
• tenure: The number of months over which the loan will be repaid.

Display EMI:

document.getElementById('result').textContent = `Your EMI is ₹${emi.toFixed(2)} per month.`;

• This line updates the text content of an HTML element with the ID result to show the calculated EMI.
• emi.toFixed(2): This formats the EMI amount to two decimal places, making it more readable.

Example Calculation

Let's assume the following values:

• realCost = ₹50000
• couponDiscount = ₹1000
• commonDiscount = ₹500
• nonEmiDiscount = ₹200
• emiPaymentDiscount = ₹300
• noCostEmiDiscount = ₹0
• processingFees = ₹100
• tenure = 12 months

#. Total Discounts:

totalDiscounts = 1000 + 500 + 200 + 300 + 0 = ₹2000

#. Principal:

principal = 50000 - 2000 + 100 = ₹48100

#. EMI:

emi = 48100 / 12 ≈ ₹4008.33

#. Displayed Result: The text content of the element with the ID result will be updated to:

Your EMI is ₹4008.33 per month.

This calculation helps users understand how much they need to pay monthly if they opt for an EMI scheme after considering all discounts and additional fees.