The EMI Trap: Why Your iPhone Could Be Eating Into Your Future Wealth

News reports say that the iPhone 17 in India will cost one over 900 hours of work. Also, media reports suggest that approximately 70 per cent of iPhones in India are sold on equated monthly instalments (EMIs). While EMIs make iPhones affordable, there is a catch.

The Illusion Of No-Cost EMIs

A “no-cost EMI” is a bit like calling a sugar-free cake healthy. The sugar may be gone, but the calories are still there in some other form. “It’s the same with EMIs, the interest doesn’t disappear, it just shows up differently. Sometimes the price is slightly higher than if you bought it outright, sometimes you lose a discount, and sometimes there’s a processing fee. That Rs 10,000 instant discount on a Rs 1,20,000 phone? The moment you pick EMI, it usually vanishes. So you’re not avoiding the cost, you’re just paying it in another way,” says Amit Suri, founder, AUM Wealth.

Small Payments, Big Trap

You know, an EMI feels harmless when you look at it in isolation. Say Rs 6,000 a month for a phone doesn’t sound like a big deal, but when you add a television here, a vacation there, and maybe a subscription or two, suddenly you’ve got a list of payments eating into your income every month. That’s when it turns into a trap. It looks manageable at the moment, but it quietly chips away at your savings and flexibility. It’s like watering a plastic plant; it looks fine for a while, but it’s never going to grow into anything real for your future.

“Buying these luxury tech using loan for blocks their monthly surplus into a fixed monthly payout that reduces their investible surplus leaving less money on the table for savings or building emergency funds,” says Abhishek Kumar, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), and founder and chief investment advisor of SahajMoney, a financial planning firm.

Short Thrill Versus Long-Term Wealth

The part people often miss is not what you’re paying today, but what you’re giving up for tomorrow. “That same Rs 6,000, if you just put it into an SIP every month, could grow into more than Rs 3 lakh in 15 years. Instead, it’s going into a phone that will lose half its value in two years. So you have to ask yourself, do you want the short thrill of owning the latest gadget, or the long-term satisfaction of building real wealth? One fades quickly, the other compounds over time,” says Suri. 

This is not to say that buying a gadget on EMI never makes financial sense.  “If one requires a laptop or a gadget to generate or increase their income, then even though it is funded by EMI, it might be a worthwhile spend. Whereas if that is not the case, then one should reassess it as that money could be used to build an emergency fund or for building long-term savings for their financial goals,” says Kumar.