Buying on Instalments: What "20% Markup" Really Costs a Year
Shop instalment plans charge markup on the full amount. Four plans on a Rs 1.5 lakh item turned into a real yearly rate you can compare with a bank.
By the TurantTools PK team · Updated 28 October 2026 · 2 min read
When you buy a phone, AC, motorbike or fridge on instalments, the shop usually says "only 20% extra" or "12 easy instalments". But that markup is charged on the full amount for the whole time, while you're paying it back every month. So the real yearly rate is far higher than it sounds.
A Rs 150,000 item with Rs 30,000 down
| Plan | Monthly instalment | Total paid | Real yearly rate |
|---|---|---|---|
| 6 months, 10% markup | Rs 22,000 | Rs 162,000 | 33.5% |
| 12 months, 20% markup | Rs 12,000 | Rs 174,000 | 35.1% |
| 12 months, 30% markup | Rs 13,000 | Rs 186,000 | 51.4% |
| 24 months, 45% markup | Rs 7,250 | Rs 204,000 | 38.6% |
Ask before you sign
- What's the cash discount? Sometimes the cash price is even below the instalment base price.
- Is there a processing fee, file charge or insurance on top?
- What's the late-payment fine, and is anything taken off if you pay early?