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EMI Scheme IRR Calculator — Financier, Brand & Customer Returns

The 8/2s and 10/2s of consumer-durable finance, decoded. See the IRR the financier actually earns, what the scheme costs the brand, and what the customer really pays.

Walk into any electronics store during festive season and the financing posters all speak the same shorthand: "8/2 scheme", "10/0", "12/4". Total months, downpayment months. Simple on the surface — and underneath, one of the most precisely engineered return machines in Indian consumer finance.

The mechanics that drive financier returns — subvention collected upfront, processing fees, and especially the advance EMI — are normally locked inside NBFC pricing teams. Having sat on the brand side of these negotiations for years, I built the calculator I always wished existed: punch in any scheme structure and see the true IRR from all three seats at the table.

If you're a consumer comparing offers, start with the No-Cost EMI Truth Calculator. If you're modelling card partnerships, try the Co-branded Card Simulator. This tool is for the scheme table itself — where financier, brand and customer economics meet.

Common schemes

Scheme structure — 8/2 scheme

Financier income

Advanced — financier costs & cross-sell

Brand side

Disclaimer: illustrative. Actual scheme terms, subvention rates, fees and credit-loss assumptions vary by financier and program. For education, not investment or pricing advice.

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FAQ

What does 8/2 mean in EMI schemes?Total tenure of 8 months with 2 months' worth of EMI collected upfront as downpayment. The EMI is the item value divided by 8; you pay 2 EMIs at purchase and the remaining 6 run monthly. The financier only finances the post-downpayment balance.How do NBFCs make money on no-cost EMI schemes?Three levers: subvention (a % of the loan paid upfront by the brand), processing fees from the customer, and advance EMIs that front-load cash. Because the subvention and fees arrive at day zero while the loan disburses over months, short-tenure schemes can earn 20-35% annualized IRR even at "zero interest" to the customer.What is subvention or DBD?Subvention (also called DBD — dealer/brand discount) is the amount the brand or dealer pays the financier to make the customer's loan interest-free. It's typically 3-6% of the financed amount and is the brand's real cost of running the scheme.What is an advance EMI?An EMI collected at disbursal on top of the downpayment. The customer effectively prepays one or more instalments. It shortens the financier's exposure period dramatically, which is why a single advance EMI can lift scheme IRR by several percentage points.What IRR do consumer durable financiers actually earn?Healthy CD-finance programs typically target high-teens to low-30s percent annualized IRR depending on tenure, subvention and advance-EMI structure. Short tenures with front-loaded cash flows sit at the top of that range — which is exactly what this calculator demonstrates.

Built by Shreyas Khare — payments & partnerships operator.