Zero Percent Finance - Really ?

In my childhood I was taught to spend less and save more .But now (post 1991-92) we are taught spend more as it will help our producers , sellers , Banks and NBFS's  and hence the economy .So the average savings rate have came down today to 34% as compared to almost 50% before LPG  era i.e 1991-92.

Now to sell the sellers come up with innovative ( or cheating ) ideas one such idea being Zero Percent Finance (ZPF) .Aisa kabhi hota hai kya ? . The best economic lesson is "Caveat Emptor" i,e "Let the Buyer Beware."

Let us dissect this ZPF myth with an example.Suppose that Ramesh want's to buy a AC from a store the price being Rs.48000 with a cash discount of Rs.4000 .However the budget of Ramesh is Rs.35000 only and hence he says no .The smart sales executive ( not salesman) counsels him and says "at our shop we will not allow money to come in between you and your dreams as we provide ZPF" .He says you just need to pay Rs.1000 processing fee and Rs.16,000 i.e 4 months EMI in advance and rest you can pay in installments .Ramesh praises the sales executive buys the AC and does the ad for the store free-cost to his friends and relatives .

Now whats wrong in the above transaction - 

1. Ramesh bought AC worth Rs.48000 instead of his budget of Rs.35000 which might strain his cash flows and savings
2. He thought that he pays no interest however the truth is .He forgo a cash discount of Rs.4000 secondly the actual loan availed is Rs.32000 and not Rs.48000 as he is paying advance of Rs.16000 .So the cost of funds turns out to be Rs.5000 ( Rs.4000 Cash Discount and processing fees of Rs.1000 ) .In percentage terms is turns out to be 23.44% on annualized basis.

So दिखावो पे मत जाओ अपनि अकल लगवो