EMI can be a marketing tool if

Options

A. EMI is increasing
B. It is very high
C. It is very low
D. EMI has no impact on marketing

Answer

**Step-by-Step Solution:**

1. **Understanding EMI**: EMI stands for Equated Monthly Installment. It is a fixed payment amount made by a borrower to a lender at a specified date each calendar month.

2. **Identifying the Context**: The question asks how EMI can serve as a marketing tool. This implies that the structure of EMI can influence consumer purchasing behavior.

3. **Analyzing the Impact of EMI Levels**:
- If EMI is very high, it may deter customers from making a purchase because they may find it unaffordable.
- If EMI is very low, it can encourage customers to buy products as it makes payments more manageable.

4. **Example Calculation**: Consider a product worth 1 lakh (100,000).
- If a customer pays a down payment of 10,000, the remaining amount is 90,000.
- If the EMI is structured for 9 months, the monthly payment would be high (10,000 + interest), which could be burdensome.
- If the EMI is structured for 15 months, the monthly payment would be lower (6,000 + interest), making it easier for the customer to afford.

5. **Conclusion**: A low EMI can be a powerful marketing tool because it makes the purchase more accessible to consumers, encouraging them to buy products they might otherwise find too expensive.

6. **Final Answer**: Therefore, EMI can be a marketing tool if it is very low.

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