Be smart this festive season

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Wherever you turn today — television, newspapers, hoardings — there are advertisements galore urging you to avail of special festive offers. Many of these offers are not straight forward and can even be deceptive. Here is a guide to help you decode the true value of the discounts and freebies that are on offer currently. 

Real estate

In the current sluggish real estate market, developers are trying every trick in the book to woo buyers. A variety of offers are available, be it no equated monthly instalments  (EMIs) until possession, cash discounts, freebies, zero goods and services tax (GST), 1:99 scheme, and so on. Some of these can get complicated, so do your math.  

One of the most advertised offers is cash discounts. The developer may say that the original cost of the house is, say, Rs 1.6 crore, and he is giving a discount of Rs 5-6 lakh on it. Many are also offering freebies like modular kitchen, gold coins, etc. Then there are schemes where developers ask you to pay 1-10 per cent at the time of booking and the remaining on possession. 

How to compare deals: Don’t accept the builder's word on cash discounts. He could have inflated the price and then offered a discount. Check the rates of similar projects in the proximity. 

Freebies could be genuine, but you need to check their impact as a percentage of total property price. A 10-gram gold coin costs Rs 30,000 but is not attractive on a house costing over  Rs 1 crore. You also have no say on the type and quality of the coin.

For schemes, where developers ask you to pay in parts, the house cost is often pegged higher. The developer may also not agree to negotiate on price in such cases as he has to shell out a high rate of interest on the money he borrows for construction. Experts say that when going for such subvention schemes it’s better to go for those that are possession-bound, meaning that the balance has to be paid on possession. 

You may have seen developers advertising that buyers don’t need to pay GST on the property. Such ads can be misleading. GST is applicable only on under-construction projects that have not received occupancy certificate (OC).

Automobiles

A number of automobile companies are offering straight discounts. You can, for instance, save up to Rs 1.1 lakh on Fiat Avventura and up to Rs 75,000 on Abarth Punto. Similar offers are available on specific models from Datsun, Ford, Honda, Hyundai, Maruti, Volkswagen, Nissan, Mahindra and even luxury car manufacturers like Audi and Mercedes. Even two wheelers manufacturers like Hero are giving discounts on their scooters.

How to compare deals: Nowadays, offers are available all-round the year. They start around Diwali and peak towards the end of the year as manufacturers try to sell off their inventory. You could get even better offers in December than the ones available now. But this has certain pros and cons. You may get a higher discount on a car purchased in December 2017, but it will enjoy lower resale value than a car purchased in January 2018. 

Instead of getting carried away by the offers being made, your priority should be to choose the right car. Take into account factors like maintenance cost. Toyota, Honda and Maruti score on this count. Also decide whether you should opt for a petrol or diesel vehicle. Someone in New Delhi, for instance, who doesn’t drive his car much and expects to keep it for long may opt for a petrol model, as regulations permit you to own a petrol car for 15 years while the limit for a diesel vehicle is 10 years. Someone who drives his car a lot may, on the other hand, opt for a diesel vehicle. “You also have to choose the right model based on whether you are buying it for your own driving pleasure or whether it is merely a means of transport for you,” says Jatin Ahuja, founder and managing director , Big Boy Toyz, which markets luxury cars in India. In case of luxury cars, you also need to consider the gadgets and amenities being offered.  

The offers should be considered only after you have chosen the right model. An upfront cash discount is obviously the best. Put a monetary value to each offer (zero maintenance pack, complimentary insurance, freebies, etc) and arrive at the total savings from a dealer, then compare competitive offers. 

White goods 

Most mobile manufacturers have reduced prices for the festive season. Motorola is giving discounts ranging from Rs 800-4,500 and Xiaomi, Rs 1,000-2,500. Samsung is offering mobile phones as freebie along with its refrigerators and televisions. If you decide not to take the mobile phone, retailers are willing to give a discount to the extent of the phone’s price. On its televisions, LG is offering a 10 per cent cashback on ICICI Bank credit cards, and 7.5 per cent on HDFC Bank and Kotak Bank cards. 

Retail stores such as Lifestyle are giving vouchers worth Rs 2,000 on shopping of Rs 5,000. Many others are offering 5-10 per cent cashback on credit cards.

This year the offers being made on consumer durables are more straightforward, and not as deceptive as those in the past. “We are primarily seeing offers like price discounts, finance-related, and exchange offers. This is because of the GST effect. Once a retailer has paid GST on the purchase price, he can't give offers like foreign trips and gold coins, or else he would have to pay for them out of his own pocket,” says HS Bhatia, a Delhi-based industry veteran.

How to compare deals: If a company is giving a cash discount, go for such an offer. Many retail stores are even willing to negotiate further discounts if you bargain hard. 

Another trick is to go for a product that is not the highest selling one. Say, you want to buy a refrigerator with a large volume. A manufacturer is selling it in three different capacities — 350 litres, 450 litres and 550 litres. If the one with 450 litres capacity is the highest selling one, go for the 550-litre one. You may get a higher discount there.

For cashback offers, card issuers partner with the retail store or manufacturer, which compensates for them from its own margin. “Many offer cash backs on a minimum spend. There could also be a restriction on the maximum cashback offered,” says Navin Chandani, business development officer, BankBazaar.com. Some issuers give cashback after two-three months. Many may withdraw the cashback if you revolve the outstanding. “Go for cashback offer if you are sure you can pay back on time and don’t overspend just to get the discount,” says Chandani.
On offer this time:
  • Real estate: After RERA, developers are asking a lower upfront amount and the remaining on project completion. You can even book by paying as low as 1% of the property price

     
  • Auto: To ease the loan burden, car makers such as Nissan, Renault and Skoda are offering loans at a subsidised 7.99% 

     
  • White goods: Players such as Xiaomi and Motorola are offering discounts of Rs 800-4,500 on popular mobiles that cost between Rs 8,999 and Rs 29,499

     
  • Credit cards: Banks have tied up with online as well as physical stores to offer 5-10% cashback. Do mind the minimum spending limit

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