October 21, 2022
Listen to festive offers and loans: do they really help you save?
The festive season in India begins on the occasion of Ganesh Chaturthi and continues until Diwali. Festivals are special occasions that bring new hopes and beginnings in everyone’s life. Many people wait all year round and plan their big purchases during auspicious festivals, especially Diwali which is considered the biggest festival in India. Therefore, most e-tailers, brick-and-mortar merchants, banks, and other financial institutions offer attractive offers to attract consumers. Many of us are tempted by these offers and often buy products and services that we may not even need. If you’re up for something and considering taking out a loan or taking advantage of these offers, read this article to find out if these festive loans and offers really help you save.
The Indian market is flooded with discounts and offers on Consumer Durables, No Fee EMIs, App Based Loans, Credit Card EMIs, Cash Back, Car Loans, Home Loans, personal loans, etc., among others. Although these discounts and offers seem too good to be true, before taking advantage of them, it is crucial to check whether they really help you save your money or if they are just another marketing gimmick.
Let’s see the benefits of buying goods and services and availing loans during the Diwali sale:
1. Discounted Products:
As mentioned, almost all online and offline merchants offer discounts for the festive season and offer directly from Ganesh Chaturthi until the end of Diwali. Similarly, most banks and non-bank financial companies (NBFCs) offer processing fees and interest rate discounts. Therefore, if you have a specific high-cost product planned or a large loan such as a home or car loan, now could be a good time to take advantage of these benefits.
2. Refund offers:
Many merchants offer cash back on purchases made with debit and credit cards. Generally, online merchants offer attractive cashback offers on co-branded bank cards. For example, currently, Amazon India is offering 10% instant rebate up to Rs 10,000 on EMIs of Citi Bank and ICICI Bank debit and credit cards, and Flipkart is offering 10% instant rebate with a condition of a total discount of up to Rs 14,750 on SBI and EMI cards.
3. Lower interest rate:
Many leading banks and NBFCs offer lower interest rates on home, car and personal loans. Indeed, there is a high demand for these types of loans during festivals, as the purchase of expensive and important things on such occasions is considered auspicious. Financial institutions are trying to capture as much of the market as possible by taking advantage of the increase in demand by introducing competitive interest rates.
4. Discounts on processing fees:
Processing fees are another sore area for borrowers that banks and NBFCs are offering during the holiday season. Processing fees can vary between 0.25% and 6% of the loan amount, depending on the type of loan. Some lenders and credit card providers also charge a flat processing fee that remains the same for all borrowers, regardless of the loan amount. If the discount offered on the processing fee is considerable, it can save you your total loan expenses.
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5. Instant Approvals:
Since people prefer to get delivery of commodities on auspicious days like Laxmi Pujan, Dussehra, Padva, etc., financial institutions try to speed up the loan approval process.
6. Helps improve credit score:
Taking advantage of EMIs and credit card loans and repaying them in a timely manner will help improve your credit score. So, if you are trying to improve your credit score or build a credit history and get good deals on credit facilities, you can use it to build your credit profile.
As every coin has two sides, there are some downsides to shopping during the Diwali sale:
1. Splurge needlessly:
When it comes to expensive loans like home and car loans, people choose them only when they have planned them in advance. However, many borrowers are lured by personal loans and credit card offers and either take out the loan or swipe the credit card without any plan. A personal loan is the best choice in an emergency, especially when you have no other financial support and are in dire need of funds. Unfortunately, people often apply for personal loans and credit card EMIs for instant gratification and pressure themselves into paying hefty EMIs. So if you want to buy that gadget, jewelry or luxury item that can easily be carried over, it is crucial to analyze your needs and wants so that you can resist the temptation to splurge if not necessary.
2. Prices could have been increased just before the sale:
Often, merchants raise the prices of products and services a few days before the sale and post discounted prices during the sale, which are, in fact, the actual prices or could be a little lower, which might not make a considerable difference. for the buyer. Such reductions do not help you save but increase your expenses and can disrupt your budget.
3. No instant cashback offer:
While many top merchants offer instant cash back on debit and credit card purchases, others do not. Many times, instead of getting an initial instant rebate, you receive cash back or cash back points after 1-6 months after purchase. Cashback points generally encourage spending as these points usually come with an expiration date.
4. The burden of heavy NDEs:
Purchasing a product or service through an EMI loan or credit card becomes a long-term commitment. It becomes an additional fixed monthly expense that you cannot avoid until it is reimbursed. It can be financially stressful, especially when your budget is tight. Additionally, failure to make timely repayments can result in late payment fees and hurt your credit score.
5. High Cost Loans:
While banks and NBFCs offer several deals during festivals, a personal loan, which is in high demand during festival season, remains one of the costliest. The discount of 0.25% to 0.50% offered on the interest rate is negligible if the loan amount and/or the loan term are lower.
6. Depreciation of the product over the years:
While buying anything through a loan on an EMI credit card, it is important to calculate the expected life of the product. Consumer durables, especially smartphones, depreciate rapidly over time. It makes no sense if your product loses value before the loan is paid off. Likewise, if the term of the auto loan is too long, your car may lose value before the auto loan is paid off. Additionally, most brands periodically release new models, rendering previous models obsolete and ultimately driving down their prices.
Do holiday loans and offers really help you save money?
Taking a loan is not a “bad thing” as long as you take it after analyzing your needs and your ability to repay it on time. It’s important to calculate exactly how much you’re saving and check for any hidden charges. People often make purchases because there is a discount on the product or the EMI option is available instead of buying it because of a need. Taking advantage of Diwali offers and loans to buy something you actually need during the festival can make sense if you are financially strong enough to repay the loan comfortably and are confident about your financial discipline. A personal loan taken out to buy a laptop can be a good investment for someone who bought it for school and can be a financial burden for someone who bought it just to get the latest model. on the desk. When you buy something out of instant gratification instead of a need, you don’t save any amount no matter what discount and cashback you get. Therefore, it is crucial to assess your needs and desires before availing Diwali offers on different products and loans this Diwali. Instead of splurging, this amount can be invested in short and medium term financial instruments and then put to good use.