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Why Paying Off Your Smartphone in Installments Might Not Be the Best Idea


Smartphones have become an indispensable part of our daily lives as communication devices, personal assistants, and even entertainment devices. However, as smartphones continue to evolve and offer increpasingly advanced features, their prices have also increased. In response to this, many retailers and mobile service providers offer the option to purchase smartphones on installment plans, known as Equated Monthly Installments (EMIs). While this may seem like a convenient way to get the latest smartphone, there are several drawbacks to consider.

In this article, we will discuss why paying off your smartphone in installments might not be the best idea.

Accumulation of Interest  

One of the biggest drawbacks of purchasing a smartphone on EMI is the accumulation of interest. When you choose to pay for your phone in installments, you are basically taking a loan from the seller or service provider. They may advertise low or zero percent interest, but in reality, the interest is often hidden within the overall cost of the phone or as processing fees. This can result in you paying more for your smartphone than its actual market price.

Limited Flexibility  

EMIs often come with rigid terms and conditions, leaving consumers with limited flexibility. If your financial situation changes or you wish to switch to a different phone, you may find yourself stuck with a contract that is hard to modify or terminate without incurring penalties. This lack of flexibility can be especially problematic in the current scenario, when economic circumstances fluctuate rapidly.

Binding Contracts

When you opt for an EMI plan for your smartphone, you enter into a binding contract with the seller or service provider. These contracts can be complicated, with different clauses that may not be in your favour. It’s crucial to read and understand the terms and conditions carefully, as defaulting on payments or trying to exit the contract prematurely can result in hefty penalties or even legal action.

Hidden Charges  

EMI plans come with hidden charges that can catch consumers off guard. These charges may include processing fees, documentation charges, etc. Buyers should thoroughly investigate and calculate the total cost of the smartphone, including all associated fees, before committing to an EMI plan.

Ownership Rights  

While you might use the smartphone throughout the EMI period, you may not have full ownership rights until the last installment is paid. Thus, you must face obstacles if you want to sell or trade-in your phone before completing the payment. In contrast, purchasing a phone outright grants you immediate ownership and the freedom to do as you please with your device.

Impact on Credit Score  

Your credit score is an important financial metric that can affect your ability to obtain loans 

and credit cards in the future. When you enter into an EMI agreement, it is recorded in your credit history. If you miss payments or default on the EMI, it can negatively impact your credit score, making it more challenging to secure credit for other financial needs.

Potential for Overcommitment  

EMI plans can encourage overcommitment, as they make expensive smartphones appear more affordable by breaking down the cost into smaller monthly payments. This can lead to impulsive buying decisions and a cycle of debt, especially among younger consumers who may not fully understand the financial implications.

How multipl Can Help You With Your Smartphone Purchase

multipl helps you create and achieve financial goals through spendvesting. Using the app, you can set your smartphone purchase goal amount and time duration. Subsequently, multipl creates a customised investment plan that aligns with your goal, taking into account your risk profile and financial capacity. This goal-based approach makes it easier to track your progress and stay motivated.

In addition, multipl automates the investment process, which means you can set up your SIPs and let the app take care of the rest. You can track your investments, view the growth of your funds, and stop the goal to encash it with returns in case of an emergency. This transparency and visibility make it easier to stay committed to your goal and make informed decisions.

Thus, multipl is a valuable ally in your pursuit of a debt-free life. 

Final Words

multipl is a powerful financial goal-planning and investing app that can make your smartphone purchase dream a reality. By setting clear goals, enabling SIPs, and automating the investment process, multipl simplifies the path to smartphone ownership. Embrace multipl and embark on your journey to own that coveted smartphone with confidence and financial stability. To learn more, download the multipl app on Android & iOS now!

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