do they really help save money

October 21, 2022

The Indian market is inundated with discounts and offers on consumer durables, free EMI, app-based loans, credit card EMI, cashback, auto loans, home loans, personal loans and more. These discounts and offers sound like a good deal, but before you take advantage of them, it’s important to check whether they really help you save money or are just marketing gimmicks.

Let’s take a look at the benefits of purchasing products and services during Diwali Sale and taking out loans.

1. Discounted products:

As explained, almost all online and offline merchants come up with discounts and offers for the festive season from Ganesh Chaturthi to the end of Diwali. Similarly, most banks and non-bank financial companies (NBFCs) offer processing fees and interest rate discounts. So, if you’re planning on taking on certain big-ticket items or large loans like mortgages and car loans, this could be the right time to take advantage of these benefits.

2. Cashback Offer:

Many merchants offer cashback on debit and credit card purchases. Online merchants generally offer attractive cashback offers on co-branded credit cards. For example, currently Amazon India is offering 10% instant discount up to Rs 10,000 on Citi Bank and ICICI Bank debit and credit cards EMI and Flipkart offers 10% instant discount subject to a total discount of up to Rs We offer discounts. 14,750 with SBI card and EMI.

3. Low interest rates:

Many large banks and NBFCs are cutting interest rates on mortgages, auto loans and personal loans. This is because such loans are in high demand as it is considered auspicious to purchase something expensive and important during the festival season. Financial institutions try to take advantage of the increased demand by introducing competitive interest rates to capture the largest market.

4. Processing fee discount:

Processing fees are another issue for borrowers that banks and NBFCs offer during the holiday season. Processing fees range from 0.25% to 6% of the loan amount, depending on the type of loan. Some lenders and credit card providers charge a fixed fee to all borrowers regardless of the loan amount. Larger discounts on processing fees can lower your total loan outlay.

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5. Immediate Approval:

Financial institutions try to expedite the loan approval process as they prefer to receive their goods on auspicious days such as Lakshmi Pujan, Dashara and Padva.

6. Helps improve your credit score:

You can improve your credit score by taking advantage of credit card EMIs and loans, and making timely repayments. So if you’re looking to improve your credit score, build a credit history, or get a good offer on the credit facility, you can use it to build your credit profile.

Like every coin, there are two sides to shopping during the Diwali sale.

1. Unnecessary splurge:

When it comes to big loans like mortgages and car loans, people only choose them if they plan ahead. However, many borrowers are misled by personal loan and credit card offers and take out loans and use credit cards without any plans. Personal loans are great for emergencies, especially when you need funds urgently with no other financial support. Sadly, people often apply for personal loans and credit card EMIs for instant gratification and are stressed by paying large amounts of EMI. So if you want to buy an easily postponed gadget, jewelry or luxury item, it’s important to analyze your needs and desires so that you can resist the temptation to splurge when you don’t need to.

2. The price may have been increased just before the sale.

Merchants often increase the price of their products and services just days before the sale and display discounted prices during the sale. In fact, it may be the actual rate or slightly lower. buyer. Such discounts don’t save you money, but they can increase your spending and disrupt your budget.

3. No instant cashback:

While many large merchants offer instant cash back on debit and credit card purchases, some do not. In many cases, instead of receiving immediate discounts upfront, you will receive cashback or cashback points one to six months after your purchase. Cashback points usually encourage spending, as these points usually have an expiration date.

4. Heavy EMI Burden:

Purchasing a product or service through a loan or credit card EMI is a long-term commitment. It will be an unavoidable extra monthly fixed expense until you pay it off. This can be financially stressful, especially if you have a tight budget. Also, not paying your bills on time can result in late fees and hurt your credit score.

5. High Value Loans:

Banks and NBFCs offer several offers during the festival, but personal loans, which are in high demand during the festival season, remain one of the most costly. If the loan amount and/or loan term is lower, the 0.25% to 0.50% discount offered on the interest rate is negligible.

6. Product depreciation over time:

When purchasing anything through a credit card EMI loan, it is important to calculate the expected life of the product. Consumer durables, especially smartphones, depreciate rapidly over time. It doesn’t make sense if the value of the product is lost before the loan is repaid. Similarly, if the term of your car loan is too long, your car may lose value before you pay off your car loan. Additionally, most brands launch new models on a regular basis, making the previous models obsolete and eventually dropping in price.

Do Holiday Season Loans and Offers Really Help You Save Money?

Taking out a loan isn’t a “bad thing” as long as you take it after analyzing your needs and your ability to pay it back on time. Accurately calculating how much you can save and making sure there are no hidden charges is important. People often buy because there are discounts on the product or because EMI options are available, rather than because they need it. Taking advantage of Diwali offers and loans to buy what you actually need during the festival is best done if you are financially sound enough to comfortably repay the loan and are confident in your financial discipline. It makes sense. A personal loan taken out to buy a laptop might be a good investment for someone who bought it for study, but only to keep the latest model on their desk. If you buy something that you don’t need and are immediately satisfied with, no amount of discounts or cashbacks will save you money. It is important to assess your needs and desires before taking advantage of Diwali offers on various products and loans for this Diwali festival. Instead of splurging, you can put this amount to good use by investing it in short- to medium-term financial instruments.

Best regards,
Ketki Jadav

content writer