Should you buy the iPhone 15 on EMI?

• It is advised that one should use a maximum 30% of salary for wants and desires.
  
• EMI options can be considered, as long as the EMI stays within manageable limits of one’s budget.
  
• Buying one generation earlier versions of aspirational wants is a smart option to buy them.
  

People queuing up at the Apple Store all night to buy the latest iPhone, reminds one of the marketing frenzy unleashed by Harry Potter’s publisher over two decades ago. Call it a fad or cult following, if you please, but some products are not just about use cases.

The latest iPhone is an aspirational product but can cost you a lot of money starting from ₹79,999 going up to ₹1,59,990. Nowadays, it is easy to get a loan to buy a phone or even pay for a holiday. But the question which arises is that should one buy an aspirational product on EMI?

We take a look at the questions one should ponder and possibly answer before making the decision.

Can I afford it?

Incidentally, this is the first question one should ask oneself before purchasing anything, or at least the things that fall in the category of a want and not a need.

According to the thumb rule, half of your post-tax income should go towards essential expenses, while 30% can be allocated for indulgences or personal desires. Reserve the remaining 20% for savings and investments to pursue your financial objectives.

Thumb rules are not set in stone. However, going by the above, if your post-tax income is ₹50,000 per month, you should buy a phone that costs between ₹15,000 to ₹20,000.

As per the above thumb rule, your salary should be above ₹ 2.5 lakh per month for you to be able to afford the base model of iPhone 15.

Does that mean that if your salary is less than that, you should not buy the iPhone 15? It is not that simple.

Need vs Want

This brings us to the next question - do you really need it? If you bought a new phone last year, and it is working fine, you do not need a new phone.

If you are a content creator, who makes a living out of shooting pictures and reels, the iPhone 15 may make sense, if it serves your purpose. If that is the case, then you may stretch your budget as it may be a ‘need’ and not a ‘want’ in economics terms.

In the case of most users, the buy is a ‘want’. For that one needs to play it smart. An option is buying a one generation earlier version of the product, in this case, the iPhone 14 which is now available at ₹62,999. There is also the option of refurbished iPhones that come with a warranty, but cost less.

What if I get it on equated monthly instalments or EMIs?

Aspirational products are also available with a host of funding options - credit card EMIs, buy now, pay later, and so on. While no cost EMIs charge no interest and have shorter tenures of six months, the EMI would be on the higher side.

EMIs with longer tenures and a lower EMI will charge an interest and you end up paying more for the product than what it costs.

Personal finance pundits always advocate that buying a depreciating asset on a loan is never a good idea.

In case one opts for an EMI and misses payments, it can translate to hefty penalties and the credit score gets affected. Additionally, it may lead to a debt trap if you cannot pay back in a timely manner.

To conclude, the moot point is that don’t bite off more than you can chew.