There is no free lunch!

In push-marketing, managers sell the product with lot of catchy words - 0% interrest, attractive prizes, free articles, 50% discounts and a lot of promotional offers. But in real world, there is nothing called free lunch. All these offers are carefully sandwiched with good finance deals. Lets analyse few.

Zero pecent interest scheme for loans are the best push deal ever I have seen in automobile industry. Bank lends you 50-60% of the entire amount and the loan can be paid in easy installements at 0% interest. Gosh, look like a ready-to-grab deal right?! but not so. After reading the fine prints in the paper advt, drop in a dealer shop and talk to them. They will add an extra clause: you have pay an extra amount for the loan transaction with bank. Usually that works out to be nearly 8.33 to 12% interest rate.

Next is attraction over operational lease and finance lease in car lease policy of corporates. In finance lease, the company takes loan from a financial institution and buys a car for you. You have to pay for the maintenance costs. In operational lease, the car lease agency hires you a brand new car through your company. You have to pay the EMI to the car lease company. Attraction is, when your car gets into any problems, the lease agency will come for your rescue. They will pay all the penny for your car maintenance. Looks great right?! Catch is at the end of car loan period, you are not the owner of the car unlike the finance deal. You have to pay 25% of car cost to get that car for yourself. And there is an additional charge in EMI every month to the tune of the 10-20% compared to EMI in finance deal. Suppose you pay INR 500,000 to buy a car in all-cash deal, the actual cost may scale up to 20% in finance deal (INR 600,000) and nearly 50% in operational lease (INT 750,000). It's all our hard earned money burning off at the end of the day.

 

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