While buying electronic gadgets I get to pay the seller in two modes. I have never been able to evaluate which one is better.
Let's say I buy a phone worth INR 24,000. The seller offers me two options:
- Take the EMI option for 6 months and pay INR 4,000 every month.
- Pay the entire amount upfront and get discount of INR 1,000 effectively paying INR 23,000 for the phone.
How can I evaluate which one would be better? What other variables do I need to consider if I need to make this evaluation? Is there any simple formula which I can run through my mind and figure out at the time of buying as to which mode is better?
While using the EMI option there may be other charges involved here like processing fee, taxes and so on which I have not included. Do they need to be included for final calculation or they would make it even more complicated?