Smartphone EMI Culture: Want to buy an expensive smartphone but can’t afford to pay 70-80 thousand rupees at once? The facility of EMI has made such purchases common, but a debate has started again on how big a burden EMI can be on a family’s budget for small items taken one after another. After the tragic death of a youth and his parents in Maharashtra’s Chhatrapati Sambhajinagar, smartphone EMIs and easy consumer loans have come into the limelight.
According to initial police and media reports, the youth had a dispute with his family over an expensive mobile or giving money for its EMI. In the subsequent incident, his parents died while trying to save the youth. Different preliminary reports differ slightly on the age of the young man and the exact details of the dispute, but sources say a family dispute over a phone preceded the incident. Are easy consumer loans and EMIs increasing people’s habit of spending beyond their real financial capacity? Now many questions have been raised in this regard
₹80k phone, but looking at just ₹4k EMI
The biggest attraction of the EMI model is that it splits the cost of any expensive item into small monthly amounts. Suppose the price of a smartphone is ₹80,000. Instead of thinking about spending the entire ₹80,000, the customer often only thinks about whether they can pay the installments of ₹3,000 to ₹5,000 per month.
This is where the problem can start.
Because the same person may already have bike or car EMIs, home electronics EMIs, credit card bills, personal loans or other debts. Each EMI may seem small separately, but the total figure of all the amounts can eat up a large portion of the monthly income.
EMI doesn’t make things cheaper
‘No Cost EMI’ or easy financing gives the customer instant access to an expensive item, but one important thing to understand—EMI does not cheapen the item, it only shifts part of the payment today to future income. So customers can only pay this EMI? Instead of asking the question ‘How much of my total income is already going towards EMIs?’ It is also necessary to see.
Ban on phone features if you don’t pay the phone loan?
With increasing volume of loans from smartphones and other digital devices, the RBI has also framed rules on the use of technology for loan recovery. Under RBI’s new framework, a lending institution can phase out certain features of the same mobile, tablet or laptop, with certain conditions, for the device it has lent to purchase. If a person has defaulted on a car, home loan or other unrelated loan, his phone cannot be banned on this basis. These rules are to come into effect from 1 January 2027. This action also cannot be done immediately. A process including prior notice to the customer and several security conditions apply. Provision is also made to ensure that essential services are not stopped completely and that control is removed quickly after payment of dues.
Smartphones are no longer just a luxury item
The issue is also important to the regulator because today’s smartphone is not just a tool for making calls or social media. Phone has become indispensable for banking, UPI payment, OTP, based verification, job-business, government services and daily communication. So the act of shutting down the entire phone in lieu of non-payment of the loan can have a wider impact on the customer’s life than the loan itself. It is for this reason that RBI’s model tries to strike a balance between loan recovery and consumer protection.
The real risk is not a single EMI, but a stack of EMIs
Buying a smartphone on EMI is not a problem. EMI enables millions of consumers to spread the cost over time to purchase essential and useful items. The risk increases when the customer incurs multiple EMIs simultaneously and has already spent a large portion of the future income. Total monthly debt, income stability, emergency expenses and previous loans must be considered before starting each new EMI. Not only can the cause of the Chhatrapati Sambhajinagar tragedy be attributed to mobile EMI alone, but it has opened an important debate on India’s fast-growing ‘buy now, pay later’ consumption culture.