Amazon's EMI discount offers - What's the catch?

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skoka123 said:
You seem to have got it all wrong. Not only are you losing your Savings bank interest income if you prepay you are also paying the Rs 120 on your foreclosure. In effect you are losing Rs 150. In case of Zero EMI you will only pay the GST on the interest and not interest + GST. So, interest of Rs 150 will mean .18% x 150 = Rs 27. In effect you will be losing foreclosure charge + loss of savings account interest - GST on EMI interest = 120 + 30 -27 = Net loss of Rs 123 if you foreclose.
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I have yet to see how it pans out, but I went through the T&C. It stated that outstanding interest will not have to be paid in case of foreclosure. Since the interest is already discounted from the upfront price, with foreclosure you save on the interest and GST that you will have to pay if you continue with the EMI.

So, there is indeed a benefit in foreclosing the loan early on,
 
t3chg33k said:
I have yet to see how it pans out, but I went through the T&C. It stated that outstanding interest will not have to be paid in case of foreclosure. Since the interest is already discounted from the upfront price, with foreclosure you save on the interest and GST that you will have to pay if you continue with the EMI.

So, there is indeed a benefit in foreclosing the loan early on,
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I still do not understand how it can be beneficial. The foreclosure is 2% of total outstanding Principal while the GST you pay is 18% of interest. So you will pay Rs 120 on 6K as foreclosure where as you will pay 18% of interest ( 1% monthly interest on 6K + 1% monthly on 3K the next month which comes to 60 + 30 = Rs. 90). All you will have to pay will be 18% on Rs 90 which is Rs 16.

Rs 120 for foreclosure vs Rs 16 for GST. I have not even considered the Rs 30 you would get from your savings account interest. Anyway, we have dragged this thread to the point of boring the rest of the members.
 
skoka123 said:
I still do not understand how it can be beneficial. The foreclosure is 2% of total outstanding Principal while the GST you pay is 18% of interest. So you will pay Rs 120 on 6K as foreclosure where as you will pay 18% of interest ( 1% monthly interest on 6K + 1% monthly on 3K the next month which comes to 60 + 30 = Rs. 90). All you will have to pay will be 18% on Rs 90 which is Rs 16.

Rs 120 for foreclosure vs Rs 16 for GST. I have not even considered the Rs 30 you would get from your savings account interest. Anyway, we have dragged this thread to the point of boring the rest of the members.
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Yeah, so last post on this matter. You are again forgetting the fact that interest will be charged for monthly EMI but not for foreclosure.

Foreclosure saves you the outstanding interest payment as well as GST on it. You have to pay 2% of the outstanding as penalty besides foregoing the lower bank interest. Thus, foreclosure results in a net benefit. That is also the reason why banks normally discourage foreclosure as it is a net loss besides resulting in untimely infusion of funds for the bank.
 
vivek.krishnan said:
@t3chg33k Could you mention which CC is allowing foreclosure? Would like to know myself. AFAIK, AMEX allows without extra charges
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I tried the ICICI Debit Card EMI only because it offered the 10% discount as against the 5% Amazon Pay cashback. Their foreclosure condition was 2% of outstanding and it could only be initiated 15 days after the transaction.

However, no deduction has happened yet in a month, so waiting for some transaction to take place before I foreclose.
 
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