Festive sales and easy credit India’s major e‑commerce platforms are flooding the market with deep discounts, instant‑loan offers and no‑cost EMI schemes ahead of the festive season. A smartphone priced at ₹1 lakh can now be split into monthly installments of a few thousand rupees, making high‑ticket items appear affordable.
How to gauge affordability Financial analyst Nikhil Singh Gangwar, manager at smallcase and research analyst at Equivision Consulting, advises shoppers to calculate a **total EMI‑to‑income ratio** that includes existing home, car and credit‑card EMIs, any pay‑later dues and the proposed new instalment. “If the total crosses 35‑40 percent of monthly take‑home pay, the purchase is not affordable, however attractive the offer looks,” he says.
Beyond the ratio, Gangwar recommends a **stress‑test**: can the household still meet payments if income falls by 20 percent or an unexpected medical bill arrives, without touching an emergency fund? He suggests keeping a cash reserve that covers at least six months of living expenses and EMI obligations.
Hidden costs of no‑cost EMI While “no‑cost” sounds appealing, experts point out that merchants often offset the interest by offering a discount, and GST is still levied on the interest component. Processing fees may also apply. Consequently, the total outflow can be higher than the advertised price, especially when cash‑discount or cashback offers are forfeited.
Red flags of a debt trap Small, seemingly harmless instalments of ₹2,000‑₹3,000 can accumulate into a heavy monthly load. Gangwar warns of warning signs such as: - Paying only the minimum on credit‑card bills. - Taking a fresh personal loan or new credit card to service existing dues. - Using credit for routine expenses like groceries or rent.
Adhil Shetty, CEO of BankBazaar, adds that borrowers should look at the **overall debt burden** rather than evaluating each EMI in isolation. “If repayments begin affecting essential spending or regular savings, further borrowing deserves careful reconsideration,” he notes.
What to monitor going forward Consumers should compare the **effective cost of financing**—interest rates, processing fees, pre‑payment penalties and tenure—against the best upfront price. A lower EMI may simply extend the loan term, increasing total interest paid.
Before clicking ‘Buy’ during the festive rush, the simple question remains: *Can the monthly payment comfortably fit into the budget after accounting for existing debt and a buffer for unexpected expenses?*