Are festive discounts on cars for real?

With car manufacturers and dealers doling out attractive offers, have you been counting the gains that you will pocket? Even as each manufacturer is eyeing your parking space by offering tempting deals one must not get bamboozled.
Here are five offers one should always take with a pinch of salt:

Diminutive EMIs
Even as you have been coughing Rs 12,500 equated-monthly installment (EMI) on your Rs 5 lakh loan taken for three years, have you been wondering how are SUVs and high-end cars being offered at an EMI of Rs 5,999 or 7,999? This is what we call a deal too good to be true.
Car financiers offer these seemingly low EMIs only for the first year. Under these step-up loans, your EMIs increase each year. So, don't be surprised if the EMI shoots to unmanageable levels in the next couple of years.
Also, the fine print available with the dealer mentions that the EMI is for 7-year loan tenure. Note that longer the loan tenure higher the total interest paid. Under a 5-year term you would easily save Rs 89,033 of additional interest you pay on Rs 5 lakh loan. This would further reduce for a 3-year loan tenure, provided you can afford the EMI.

Buy now pay later
Select luxury car makers are offering a booking with zero down-payment. Before you rush for the nearest store and book one, understand that there are no free lunches. What the dealer hasn't announced is that you would have to make a lumpsum payment (also called bullet payment) of Rs 1.5-3 lakh during the loan tenure. So, even as you stabilise your expenses to meet the car loan EMIs, you would have to arrange for the bullet payment.

Low interest rate
Enthused by the 6.99%, 7.99% interest rates being offered on car loans, when the market rate is hovering 10.6-15%? The reduction in interest rate is a result of the dealer and manufacturer pooling in the discount, insurance commission they earn, cost of freebies and the likes into the interest scheme.
"If you opt for lower interest rate scheme then you cannot avail the discount and freebies available such as free insurance, extended warranty, music system, mud flaps, the Bluetooth or rear sensor," informed a dealer.
Elaborating on the scheme an expert not willing to be named points out, "On a Rs 4 lakh loan for 5 years the EMI would be Rs 8,810 EMI at an interest of 11.5%. The discount of Rs 20,000 on car is pooled into the offer, thus reducing the loan amount to Rs 3.8 lakh. Now the EMI would be Rs 8,369. But the dealer never tells you he is financing the car to the extent of Rs 3.8 lakh instead of Rs 4 lakh. He simply says 'Instead of 11.5% interest, I would offer you 9.4%'. You would then be too elated to check the details."

Exchange bonus
Most dealers state that the festival discount would be offered only for buyers who exchange old cars. There are chances you might not bag the actual resale value of your car. "In the lure of getting a new car, one tends to forget the value of the old car," says Banwari Lal Sharma, vice president - product at CarWale. To avoid deception, one should always check the value of old car with multiple dealers before handing it over.

Don't ignore basics
In the euphoria of bagging a fabulous bargain never forget to inspect what you are getting at hand.
"Buyer should always invest time and assess the car twice –before registration and prior to delivery. You need to check for the colour of the car, possible damage during transit from the factory to the warehouse in broad daylight before the car is legally yours," says Sharma.
Examine the car windows for the year mark, chasis number near the engine, signs of corrosion, colour and the likes.
"Once the taxes have been paid, the insurance is done, RTO papers are ready and the car is transferred to your name changing the car is difficult. However, inspecting the car before delivery would ensure that the dealer repairs the car before handing it over," Sharma adds.
A list of freebies not offered on delivery day due to rush should be asked for in writing to ensure you are handed these later.

Happy driving!