LG C9 OLED at 1.2L effective on Amazon. Hear me out.

[pauljoseph]

Hi,
I've been lurking here for the past few weeks and came across how it's more sensible to get a premium TV in retail stores rather than online.
Did some research on credit cards, no-cost EMI, etc.

Here's what I found:
1. It's almost stupid to buy anything on Amazon/Flipkart at full price even if you have all the money upfront.
2. The way RBI has put out the rules, it is illegal to lend 0% interest loans.
3. So, when you get something online with a no cost EMI option, what's actually happening is that the seller is giving an upfront discount such that discounted principal amount + interest = Total cost.

Now, what if, you buy something on No-cost EMI with maxed out timeline. You get a huge discount and the discounted amount is charged to your card.
Next, you can immediately call your bank and foreclose the loan. All you have to do is pay the discounted principal in 2-3 days. No more EMIs or additional charges.

I've heard people say there might be penalties and the like. I verified with Citibank and they said there is no penalty for foreclosing a No-cost emi loan. Penalty only applies to their normal EMI plans.

Just checked Amazon and I found a deal for LG C9 OLED at 1.39L.
And HDFC has a 24 month No-cost EMI which gives a total discount of 19k and that brings down the price to 1.2L flat out. And there are a few additional prime day discounts as well which will reduce it further.

Can someone with an HDFC credit card verify if this is true?
Also, will there be issues with claiming warranty if I buy this TV online and not from a retail store?

 

[pauljoseph]

And going by this logic, the C9 65inch costs 2.17L on Amazon.
After discount, it comes to 1.86L.

 

[dillihifi]

Well the Interest charges are there and the same will be given as upfront discount. So the effective price stays the same i.e. 1.39 and in case you opt for the No cost emi the interest payable would be 19690 which will be passed on at the time of payment and will be charges in emis. Further the interest charges levied in all the subsequent statements will attract a GST charge which amount to certain percentage of the interest amount. Pls chk. Regarding foreclosing I apprehend that the said emi plan is not an No cost plan but the normal emi plan where the interest amount is passed on to the buyer so technically it may not be possible but please do check it out.

 

[Love4sound]

Only the interest amount is given as discount upfront.When you will be paying the EMi’s bank will charge the interest rate.

 

[harryneopotter]

Only the interest amount is given as discount upfront.When you will be paying the EMi’s bank will charge the interest rate.

He won't be paying any EMI's because he will foreclose the loan the next day.

 

[Michelangalo]

He won't be paying any EMI's because he will foreclose the loan the next day.

There will be a catch. Bank never looses money. There might be some kind of adjustments so they profit out of it. Else everyone will do this and banks won't earn anything.

 

[Love4sound]

He won't be paying any EMI's because he will foreclose the loan the next day.

Ok I am a HDFC credit card user and have purchased many products using Emi. I used 50k from my credit card and 1.46L from Bajaj Finserv for 65 inch c9. Credit card loan was 12 emi and Finserv emi was for 21 months which I foreclosed within 6 months for both emi’s. Bajaj didn’t charge any foreclosure amount or interest but hdfc charged pro rata interest and gst on the pro-rata interest. They also mentioned 3% pre-closure charges and additional GST on the pre-closure is applicable but in the foreclosure statement it was not charged. But as per the loan document they could have charged.

 

[pauljoseph]

Well the Interest charges are there and the same will be given as upfront discount. So the effective price stays the same i.e. 1.39 and in case you opt for the No cost emi the interest payable would be 19690 which will be passed on at the time of payment and will be charges in emis. Further the interest charges levied in all the subsequent statements will attract a GST charge which amount to certain percentage of the interest amount. Pls chk. Regarding foreclosing I apprehend that the said emi plan is not an No cost plan but the normal emi plan where the interest amount is passed on to the buyer so technically it may not be possible but please do check it out.

Yes, the effective price is the same. And everything that you mentioned is also correct. There is no concept of "true" no-cost emis, which is illegal according to RBI.
So, I believe the whole concept of No-cost EMIs are a hack. By providing an upfront discount such that you will be paying effectively the same amount of the device across the duration of the NoCost EMI.

Now, I came across this randomly after looking at one of the old posts in r/IndiaInvestments where one guy bought a 61K phone in 12-month NoCost EMI even though he had all the money upfront, and right after buying, he decided against it, and he called the bank to cancel it. In the end, he only had to pay the discounted principal immediately and got the device at a nice discount for around 56k or something.

To verify, I called CitiBank and he mentioned that foreclosing and prorated interest charges are only applicable when you take a normal loan or a normal EMI or if you do that "convert to EMI" option for outstanding amount in your bank website/app.

 

[pauljoseph]

Only the interest amount is given as discount upfront.When you will be paying the EMi’s bank will charge the interest rate.

Correct.
But what we're doing is, immediately calling the bank and saying we'll pay the whole amount right away, thereby not having to pay any emis or gst on emis. You close the contract then and there.

 

[pauljoseph]

There will be a catch. Bank never looses money. There might be some kind of adjustments so they profit out of it. Else everyone will do this and banks won't earn anything.

The banks are not anywhere in the game here. They are just providing an upfront amount and getting emis accordingly.

After a bit of reading, what I've found is, it's an intense psychological effect at play here.
Who is giving the discount? Amazon.
Who is at a loss? All the other customers who don't opt for the NoCost EMI option.

From Amazon's perspective.
Say, the intrinsic value of a device is 26k.
If you put up the device for sale, people may or may not buy.
Now, Amazon is coming up with an option to defer payments so that it gives a false sense of purchasing power for the consumers and hence they won't feel bad about throwing 26k in one shot.
So, what they do is, they manipulate the price of the device and mention it as 30k and provide NoCost EMI option.
Now, when a customer buys the device on no cost emi, the bank will be be charged a discounted amount such that discounted amount + principal = 30k. And if this discounted amount is 26k, Amazon has still won their share of profits because that was the intrinsic value anyway.

So who is at loss here? The people who buy anything by paying upfront despite there being a no cost emi option.

Food for thought: If there is a 24month no cost emi option to pay the total price across that duration, even if you have the whole amount, you might as well park that amount in some investment portfolio which will give you some small returns. Any profit that you get will effectively be a net discount on the product.

 

[fLUX]

@pauljoseph What happens if you dont call the bank and pay the entire due amount at a single shot as part of the billing cycle, does it get auto foreclosed ?

 

[baker]

I dont understand ,

Price for TV == 1.39
with HDFC EMI option for 24 months it will be : 1.39 + 19k [interest]
But HDFC is giving the discount for interest so : 1.39 + 19k[intrest] - 19k[Discount for interest u paid]

so affectively it will be 1.39 again right ..?

And if you think , they will credit 19k to your account immediately you are wrong , it will take time t reach your account

 

[superczar]

never thought of this.. probably worth trying with a 10-20 K purchase before trying with something larger

 

[baker]

For me i have taken 12 months No cost EMI ,and monthly my EMI included the intrest and when i checked with bank they told will get the intrest cash back every after 6 months

 

[adeshagarwal]

Is the discounted interest of 19k given before checkout or later as cashback after 3 EMIs (some banks have this policy)

 

[pauljoseph]

@pauljoseph What happens if you dont call the bank and pay the entire due amount at a single shot as part of the billing cycle, does it get auto foreclosed ?

I don't think it works that way.
If you pay entire amount directly, it will just make your outstanding go in negative and will be used little by little from next month onwards for your credit card bill. But the EMI will still take its course.

Foreclosing has to be done by a bank executive.

I'm sure it works for Citibank.
Can people here please check with the other banks like HDFC, ICICI etc.?

If it works with HDFC, then we can get a C9 65inch for 1.86L right away provided you have the full amount in your savings account right now.

 

[pauljoseph]

I dont understand ,

Price for TV == 1.39
with HDFC EMI option for 24 months it will be : 1.39 + 19k [interest]
But HDFC is giving the discount for interest so : 1.39 + 19k[intrest] - 19k[Discount for interest u paid]

so affectively it will be 1.39 again right ..?

And if you think , they will credit 19k to your account immediately you are wrong , it will take time t reach your account

I'm afraid that's not the right calculation.
Price for Tv = 1.39L.
with HDFC No cost emi option for 24 months, the price for tv is still 1.39L, but you will be paying 1.39L/24 = 5791 each month, for 24 months.

Now, how are they achieving this?
They calculate it in such a way that InterestOn( X amount) + X = 1.39L.
When you solve for X with the interest %, you will arrive at X = 1.2L, which implies a 19k discount, which is what Amazon will charge your credit card.

There is nothing to credit here, they will charge you the discounted amount in the first place.
Also, your second line

But HDFC is giving the discount for interest so : 1.39 + 19k[intrest] - 19k[Discount for interest u paid]

This would mean that HDFC gave you a bank loan of 1.39L without any interest, which is illegal according to RBI.
The discount here is provided by Amazon and not HDFC.

 

[pauljoseph]

never thought of this.. probably worth trying with a 10-20 K purchase before trying with something larger

I had bought a tv for around 27K last year with a 9 month NoCost EMI because it was my first large transaction and wanted to check out the no cost emi concept.
And looking at my statement now after having a conversation with my bank, I realise that, had I foreclosed it immediately I would have had to pay only 25k.

 

[pauljoseph]

For me i have taken 12 months No cost EMI ,and monthly my EMI included the intrest and when i checked with bank they told will get the intrest cash back every after 6 months

Now that depends on bank/retailer policy I think. I've seen variations of this happening. But from reading the terms and conditions on Amazon, I can see that the discount will be upfront and not a cashback.

 

[pauljoseph]

Is the discounted interest of 19k given before checkout or later as cashback after 3 EMIs (some banks have this policy)

Like I mentioned in my earlier comment, it looks like a retailer policy. And Amazon is doing it upfront I guess.