EMI True Cost Revealer

EMI Calculator: The True Cost of No-Cost EMI

Enter any EMI offer and see what it really costs — interest, 18% GST, processing fees, the true APR, and the premium you pay over the list price.

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"No-cost" EMI still has a bank charging interest — the shop just gives you an equal discount. You pay 18% GST on that interest (on card EMIs), a processing fee + GST, and you lose any cash-payment discount.

15%
10%14–16% (typical card EMI)24%
1%
0%1–2% (common)5%
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Optional — used for the affordability check.

Monthly EMI

₹4,167

True Total Cost

₹51,281

+2.6% over list price

Loan Amount

₹50,000

Total Extra Paid

₹1,281

Interest ₹0 · GST ₹781 · Fee ₹500

True APR

4.8%

Interest + GST + fees, annualised

You're paying 2.6% more than list price

An extra ₹1,281 goes to the lender and the tax department, not toward the product. That 'no-cost' EMI has a cost.

Calculation Assumptions

Results can differ across apps when compounding or contribution timing assumptions change.

  • EMI is computed with the standard formula P × r × (1+r)^n / ((1+r)^n − 1) on the loan amount after down payment.
  • No-cost EMI: the lender charges interest at the stated rate and the merchant gives an upfront discount equal to that interest, so your EMIs add up to the price. 18% GST is still charged on that interest for card EMIs.
  • The processing fee is charged upfront on the loan amount, plus 18% GST. Interest on bank / NBFC consumer loans is GST-exempt; interest on credit-card EMIs is not.
  • APR is the annualised cost of credit (monthly IRR × 12) including interest, GST and fees — the same way lenders state APR in the Key Fact Statement.
  • The affordability check compares monthly EMI to your monthly income; it does not account for other existing debts.

Reviewed October 2026

How no-cost EMI really works

RBI does not allow a genuinely zero-interest loan. 'No-cost' or '0%' EMI offers work by having the bank charge its normal interest while the seller gives you an upfront discount equal to that interest — so your EMIs add up to the product price.

The catch: on credit-card EMIs you pay 18% GST on the interest every month, plus a processing fee (and GST on it). And if the shop offers a discount for paying in full, you lose that too.

Worked example

A ₹60,000 phone on 6-month no-cost EMI where the bank's rate is 15%: you pay ₹10,000 a month, but the bank books about ₹2,540 of interest (offset by the discount) and charges 18% GST on it — about ₹457 extra.

An ₹80,000 laptop on 12-month no-cost EMI at 15% carries about ₹1,105 of GST on interest. Add a ₹199 processing fee plus GST and the 'free' EMI costs about ₹1,340.

How the calculator works

  • Interest-bearing EMI: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with GST on the interest if it's a card EMI.
  • No-cost EMI: you pay price ÷ months; the bank's interest is calculated on the discounted principal, and GST is added on that interest.
  • Processing fees and GST on them are paid upfront.
  • True APR is the annualised cost of credit — the internal rate of return on what you receive and pay, the same method lenders use in the Key Fact Statement.

Before you choose EMI

  • Ask for the cash price. If paying in full gets a bigger discount, no-cost EMI is more expensive.
  • Check the processing fee and whether it is refunded.
  • A card EMI blocks your credit limit for the full price on day one, which raises your credit utilisation.

Frequently asked questions

Is no-cost EMI really free?

Usually not. You typically pay 18% GST on the interest component and a processing fee with GST. It's close to free only when the processing fee is zero and the tenure is short.

Why is GST charged on no-cost EMI?

The bank still charges interest — the seller just discounts the price by the same amount. GST applies to credit-card interest and fees, so you pay GST on interest you never 'see'.

Is GST charged on personal loan or consumer durable loan interest?

Interest on bank and NBFC loans is exempt from GST, but processing fees attract 18% GST. Untick the credit-card option in the calculator for these loans.

Does no-cost EMI affect my credit score?

Paying on time helps. But a card EMI blocks the full amount of your limit upfront, and high utilisation can lower your score temporarily.

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