Every festive season, the same board greets you at the electronics shop: “No-cost EMI”. TVs, washing machines and appliances are available at no-cost EMI. A ₹60,000 phone, 6 easy instalments of ₹10,000, no interest. It feels as if the shopkeeper has done you a favour. He has not. Nobody lends money for free and nobody sells at a loss. Someone pays. Lets see who.

A bank or finance firm funds the purchase and charges interest. The shop agrees to bear interest but it will recover it in one of two ways. Either the price quoted to you is higher, or you lose the discount a cash buyer would have got Take the same phone. A cash buyer gets it for ₹57,000. The EMI buyer pays ₹60,000. The ₹3,000 gap is the interest.