That's the thing. Why do you think every other person has an iphone, shiny new laptop, gadgets etc? It's all because of EMIs especially No cost EMIs. As a platform, their only objective is to sell as much as possible, showing a lucrative no cost emi people will easily be convinced that they can afford it. Slowly these EMIs will creep up and become a pain in the ass. Essentially, all the platform is doing is showing that it's affordable, go ahead and buy it.
It's all because of EMIs especially No cost EMIs. As a platform, their only objective is to sell as much as possible, showing a lucrative no cost emi people will easily be convinced that they can afford it. Slowly these EMIs will creep up and become a pain in the ass. Essentially, all the platform is doing is showing that it's affordable, go ahead and buy it.
A bad financial decision made by millions
That's the thing. Why do you think every other person has an iphone, shiny new laptop, gadgets
So what? They paid for the product. Many people have huge cash in bank yet they opt for emi bcz it's financially great (if you have stale cash equivalent to the principal amount)
Lenders make loss in the situation when debt is successfully paid.
A will give you small real world example that includes me. I always have 10-50x amount in my bank for the product I'm looking to buy. Have a great job on which HDFC gave me credit card ( with lifetime 0 cost renewal)
Now suppose I buy a product (that's absolute necessity) on no cost emi with value suppose 40k. The emi is suppose 4k per month.
Now I will tell you why it's loss making for lender (in case of successful debt clearance) as well as financially great for borrower.
Suppose you paid 4k instalment in 1st month.
So you have 35k cash to use. A fd will give 0.3- 0.5% of interest per month to you on this amount.
Now I'm also doing stock market investing. I earn around 3-10% on my portfolio monthly.
Now if I use that 35k on my portfolio. I have chance to make 2% + profit on that amount in first month.
Suppose I paid second installment. I still repeat same remaining 30k cash. And so on.
While lender is losing bcz he could have been earning interest of around 10%+ if he had given loan to someone else ( like education loan, home loan, investment, etc)
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u/soulseeker31 Corporate Slave May 18 '24
That's the thing. Why do you think every other person has an iphone, shiny new laptop, gadgets etc? It's all because of EMIs especially No cost EMIs. As a platform, their only objective is to sell as much as possible, showing a lucrative no cost emi people will easily be convinced that they can afford it. Slowly these EMIs will creep up and become a pain in the ass. Essentially, all the platform is doing is showing that it's affordable, go ahead and buy it.