EMI is right or wrong. Why should we purchase smartphones on EMI, and why not? What are the merits and demerits of EMI?
Merits & Demerits
First and foremost, buying anything on EMI means buying things on loan. A loan or debt is not always a good idea. A loan can only be beneficial for those who gain from it, such as someone investing 10 rupees and earning a profit of 50 rupees. However, taking out a loan for things that depreciate is a big decision and can often be a mistake. Depreciation means the value of an item decreases over time. For example, when you buy a smartphone worth 10,000 or 1 lakh, the value of that smartphone will not remain the same forever. At some point, the value will decrease significantly.
When you buy an expensive smartphone on EMI, let’s say it is worth 50,000 or 60,000 rupees, the value of the smartphone will not increase but decrease over time. A smartphone worth $50,000 may decrease in value to $10,000 or less. When you buy something on EMI, you don’t have to pay the full amount upfront but instead, pay a smaller amount initially and then pay with interest over a specified period. For example, if you buy a smartphone worth 60,000 rupees on EMI, you are not just paying 60,000 but more with interest, which could amount to 65,000 or even 70,000. This means you are paying extra charges for something that you could have paid less for upfront. This does not seem like a good financial decision.
They think not paying the EMI won’t affect anything, which is completely wrong. When you buy a smartphone on EMI, the financier or the handset manufacturer puts a code inside the phone. If you don’t pay your EMI bills, the smartphone will automatically be locked. You can only unlock it by paying your EMI through UPI, a bank account, or any online medium. Otherwise, it will stay locked until the EMI is paid. This means there are restrictions on smartphones bought on EMI that can’t be easily broken.
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Whenever you buy something on EMI, you spend more than necessary, which can lead to being trapped in a credit card cycle and other financial issues. People think it’s easy to pay later and buy things first, leading them to purchase expensive items they can’t afford and subsequently struggle to pay the EMI bills on time.
You may have seen people earning 20,000–22,000 per month owning a smartphone worth 1 lakh. How do you think they can afford such an expensive smartphone with such low earnings?
These people buy smartphones on EMI and end up paying extra, or even double, every month. Even though their smartphones get old, they are still paying the bills. For example, you may have seen many people owning iPhones nowadays. Everyone dreams of owning an iPhone, even if they earn less. Some people don’t need such expensive smartphones and don’t use them for professional purposes or content creation. It’s just a dream to have an iPhone for calling or texting.
If someone with low earnings buys an iPhone, they will likely pay EMI bills for 2–3 years or more. By the time they finish paying, the market will have introduced a new version that is more advanced and expensive. The iPhone or Samsung Galaxy series is designed for those earning 3–4 lakh per month. People with high earnings can afford to keep expensive smartphones, but those with low incomes should opt for smartphones worth 10,000–11,000, and only buy expensive ones if necessary. Owning an expensive smartphone without a real need is a waste of money and can lead to debt.
Consider buying second-hand smartphones.
