Phone brands bets on longer EMIs, bank cashbacks to counter slowing demand

Samsung, Apple and other smartphone brands are expanding longer EMI and ownership programmes as rising handset prices and slowing demand reshape the premium smartphone market

As smartphone prices continue to rise because of higher component costs, brands are increasingly turning to longer financing plans and flexible ownership models to keep consumers upgrading.

 

Samsung has introduced a 30-month no-cost equated monthly instalment (EMI) option for its latest Galaxy Z 8-series foldables in India. No-cost EMI allows buyers to pay in equal monthly instalments without additional interest.

 

Meanwhile, Apple has been offering bank cashbacks and no-cost EMI in India to drive sales across its online and retail stores. In US, it has introduced lease-based upgrade programme.

 

Analysts say such moves are being driven by a combination of higher smartphone prices, slowing demand and longer replacement cycles.

 

 

“This is an all-time high. If someone wants to buy such premium and ultra-premium smartphones, they would want the financing tenure to be longer so that the monthly instalment is something they can afford to pay while managing their expenses,” said Faisal Kawoosa, chief analyst at Techarc.

 

Why smartphone brands are expanding financing options

 

Smartphone prices are rising as an AI-driven memory shortage pushes up the cost of key components such as DRAM and NAND chips. Higher component costs and supply constraints have made handsets more expensive across price segments.

 

As premium smartphones become more expensive, brands are responding with longer-tenure EMIs and flexible financing plans. Instead of cutting prices, they are lowering monthly instalments to make expensive devices more affordable.

 

According to Kawoosa, rising smartphone prices, slower replacement cycles and weakening demand are all contributing to the shift towards longer financing tenures.

 

“However, as the average selling prices as well as average launch prices have gone up, it makes sense to allow users to buy on EMIs of longer tenure. For instance, today we have 24 models available for more than Rs 1 lakh, and more than 40 models priced between Rs 50,000 and Rs 1 lakh,” he said.

 

Kawoosa said record-high smartphone prices are making longer-tenure EMIs increasingly important because they help consumers spread the cost of premium and ultra-premium devices into more affordable monthly instalments.

 

Rising costs and slowing demand

 

According to Counterpoint Research, global smartphone shipments declined 11 per cent year-on-year in the second quarter of calendar year 2026, marking the weakest second-quarter performance since 2013. Omdia estimated a smaller decline of 4 per cent, but both research firms point to the same trend: Consumers are holding on to their smartphones for longer while higher prices continue to weigh on demand.

 

Speaking on the data, Kawoosa said: “The fall in shipments indicates the slowdown in current sales, leading to inventory build-up. This is why original equipment manufacturers (OEMs) are reducing their shipments as they see present sales weakening.”

 

Kawoosa said Techarc’s recent surveys of consumers planning festive-season purchases and smartphone retailers found that more than half reported being affected by rising handset prices.

 

According to him, brands have limited options to revive demand. While discounts and promotional offers are becoming more difficult as component costs continue to rise, extending financing tenures allows consumers to absorb higher prices through smaller monthly instalments. As a result, longer EMI schemes are emerging as one of the most practical tools for smartphone makers to sustain demand without cutting prices.

 

Beyond EMIs: New ownership models

 

Smartphone brands are expanding beyond traditional EMI schemes by introducing trade-ins, guaranteed buybacks and refurbished devices. The aim is to make upgrades easier while encouraging customers to stay within the same brand ecosystem, without lowering the prices of premium smartphones.

 

Kawoosa said financing is currently benefiting the premium segment, but as smartphone prices continue to rise, it is likely to expand across price tiers.

 

“Currently it’s Samsung offering 30 months, which will primarily drive premium devices. But as market conditions are changing, where some smartphones are even 60-70 per cent costlier than they were a year ago, the EMI option has to come irrespective of price tiers. However, the issue remains in the sub-Rs 15,000 segment, where buyers may not have a formal banking history or any measure such as a CIBIL score on which finance could be extended,” he said.

 

Beyond EMIs, smartphone brands are expanding ownership models through programmes such as Samsung’s Galaxy Forever and Certified Re-Newed, Apple’s lease programme, and trade-in and buyback offers to improve affordability and encourage upgrades.

 

Kawoosa said such ownership models are not new globally. Leasing, contract selling and device bundling with telecom plans have long been common in Western markets, though they have struggled to gain traction in India.

 

“I would not see Apple or Samsung’s move as selling access. They are still selling devices but, yes, enabling affordability,” he said.

 

On whether financing influences retailers’ inventory decisions, Kawoosa said it depends on the retail format.

 

“In general trade, which still accounts for the largest share of retailers, they focus on every tier from entry-level to ultra-premium. In modern trade, it’s more about mid- to ultra-premium,” he said.

 

He added that financing does not determine what retailers stock. Inventory continues to be driven by the target audience and catchment area, although retailers prefer financing options across all price segments to cater to a wider range of customers. 

 

Is ‘no-cost EMI’ really free?

 

While longer-tenure EMIs are marketed as interest-free, analysts say consumers should carefully examine the terms and conditions. In many cases, the financing cost is absorbed elsewhere in the transaction. Smartphone brands may absorb the interest component, banks may receive incentives from manufacturers, or consumers may forgo upfront discounts available on full-payment purchases. Some financing schemes may also include processing fees, require specific credit cards or have eligibility conditions.

 

Kawoosa believes the cost of a no-cost EMI is ultimately borne by the customer, even if it is not immediately visible.

 

“Of course the customer pays. Directly or indirectly, it’s the customer who pays. There are different financing models under which such schemes are launched. In some, the customer is asked to pay the interest or cost of finance, while in other no-cost EMI schemes, the cost of capital is already computed into the instalments the customer pays,” he said.

 

Global models could come to India

 

On whether India could see financing models similar to those in global markets, Kawoosa said device bundling with telecom plans has long been common internationally, making premium smartphones more affordable through monthly payments.

 

“Globally, contract selling and bundling has been on for years, and that automatically brings affordability. You pay for the device along with the tariffs. For this, I do not see other markets requiring anything different right now,” he said.

 

However, he noted that India has been slower to adopt such models because of the telecom sector’s past experience with bundled devices.

 

“In India, we have been discussing device bundling for a long time, but after the bad experience during the RCom CDMA era, operators have remained sceptical about offering devices. Many users got devices and simply threw them into the river after the plans were over. They were not traceable, and the cost of the device was never completely recovered,” he said.

 

While stronger Know Your Customer (KYC) norms have improved traceability, Kawoosa said operators remain cautious because digital fraud involving SIM cards registered using fake identities continues to persist. 

 

Will financing become the new normal?

 

Longer financing plans are becoming a key sales tool as smartphone prices continue to rise. While they make premium devices more affordable, Kawoosa said they could also extend replacement cycles.

 

“Most users will not go for another purchase unless their existing EMIs are over. This means upgrade frequency will reduce further. We could see consumers holding on to their smartphones for five to seven years instead of the three-to-five-year cycle that has become the norm,” he said.

 

As competition intensifies and smartphone prices continue to climb, financing may become as important as hardware innovation in shaping the next phase of the smartphone market.