Impact of EMI Financing on Customer Purchase Decision in the Tyre Industry: A Study with Reference to Bajaj Finance Ltd

Abstract

Equated Monthly Instalment (EMI) financing has become a widely used point-of-sale credit mechanism through which non-banking financial companies (NBFCs) enable consumers to convert lump-sum purchases into affordable periodic payments. In the Indian tyre replacement market, where purchases are often unplanned and price-sensitive, EMI facilities offered by NBFCs such as Bajaj Finance Ltd have increasingly influenced how, when, and which tyres customers buy. This paper examines the role of EMI financing in shaping customer purchase decisions in the tyre industry, with specific reference to the EMI Network Card and Insta EMI Card ecosystem operated by Bajaj Finance Ltd. It reviews the structure of retail point-of-sale financing in India, presents a schematic representation of the EMI-based tyre financing model, and undertakes a comparative analysis of cash purchase versus EMI purchase from the customer's perspective. The paper also discusses the opportunities EMI financing presents for tyre retailers, manufacturers, and financiers, alongside the challenges of affordability illusion, over-financing, and consumer over-indebtedness. Based on a review of secondary data and industry literature, the paper concludes that EMI financing acts as a significant purchase-decision accelerant in the tyre category, particularly for premium and larger-size tyres, provided it is supported by transparent disclosure and responsible lending practices.
Keywords: EMI Financing, Consumer Purchase Decision, Tyre Industry, Bajaj Finance Ltd, No Cost EMI, Point-of-Sale Lending, NBFC, Consumer Durables Financing