The festive season often brings a little extra money into household budgets. Some employees receive their annual bonuses, families set aside savings for auspicious purchases, and many decide that Diwali is the right time to bring home a new car, book a house or upgrade their two-wheeler.Banks and finance companies are ready for this rush, rolling out offers that promise lower interest rates, waived processing fees, zero-interest financing and other benefits.But before signing on the dotted line, there is one question borrowers should ask: how much are they actually saving?A festive loan offer can make a large purchase look more affordable, but the advertised benefit may not tell the whole story.
The interest rate may depend on the borrower's eligibility, a zero-interest scheme may involve costs elsewhere, and a lower monthly instalment could mean paying interest for longer. Even a processing-fee waiver may not eliminate other charges associated with a loan.For households already balancing regular expenses, existing EMIs and festive shopping, understanding these details can make the difference between a genuinely useful offer and a borrowing decision that proves expensive over time.CAR LOANS ARE GETTING BIGGER The question of affordability becomes more important as Indians take larger loans to finance vehicle purchases.
According to TransUnion CIBIL's September 2026 report, Shifting Gears 2026: Credit Drives Today's Mobility, the average sanctioned passenger vehicle loan reached Rs 8.2 lakh in the first half of 2026, up 49% from the first half of 2019.The average loan tenure also increased to 62 months, or just over five years, during the same period, five months longer than in the first half of 2019. Used-car loans accounted for 24% of passenger vehicle loan originations in the first half of 2026.The figures underline how important financing has become in helping consumers buy vehicles.
But a larger loan and a longer repayment period also make it important to look beyond the monthly EMI.A loan with a lower instalment may appear easier to manage each month, but borrowers need to consider how much they will repay over the entire tenure, including interest and applicable charges.Adhil Shetty, CEO of BankBazaar, says the decision to buy a vehicle should depend on need, savings and repayment capacity rather than festive timing alone.“Larger loan sizes partly reflect higher vehicle prices. The decision to buy now or later can rest on need, savings and repayment capacity rather than festive timing alone.
A larger down payment reduces both the loan amount and the interest outgo,” he says.As a general guideline, Shetty says total EMIs across all loans are often kept within 40% of monthly take-home income, with the car EMI forming a smaller share of that.He also advises buyers to account for insurance, fuel and maintenance costs and ensure that their emergency fund remains intact before committing to a vehicle purchase.ZERO INTEREST DOES NOT ALWAYS MEAN ZERO COSTAmong the offers that tend to attract attention during the festive season are zero-interest loans. The proposition sounds simple: buy what you want now and repay the amount without paying interest.But borrowers should first establish whether the offer genuinely reduces the total cost of the purchase.“A zero-interest loan rarely means borrowing is free; the cost is often built in elsewhere,” Shetty says.He advises buyers to compare the price offered under the financing scheme with the cash price.
If taking the loan means giving up a discount available to someone paying upfront, the apparent benefit could be smaller than it looks.Borrowers should also examine the upfront outgo, including processing fees, the down payment, advance EMIs and any bundled insurance or extended warranty. Late-payment penalties and foreclosure terms also deserve attention.“The comparing the total amount paid over the tenure with the upfront purchase price shows the effective cost of borrowing,” he says.For example, a buyer considering a car under a zero-interest scheme should not simply compare the EMI with what they can afford each month.
They should compare the total amount payable under the scheme with the cash price and the total cost of a conventional loan, taking all applicable charges into account.The same approach applies to offers advertised as loan discounts. A borrower needs to know what is being discounted, how the benefit is calculated, whether it is capped and whether it is available immediately or subject to conditions.Siddharth Batra, Advocate-on-Record at the Supreme Court of India, says consumers should begin with a straightforward question: how much are they actually saving?“If it is a zero-interest loan, get the full breakup of what you will pay over the entire tenure.
Ask for the Key Facts Statement, the annual percentage rate and all other charges. A ‘100% discount’ on what—interest, processing fee or something else?
That must be clear,” he says.The comparison should also account for any cash discount the buyer may lose by opting for finance. Ultimately, Batra says, the benefit must be assessed in rupees after accounting for everything the consumer pays.THE ADVERTISED RATE MAY NOT BE YOUR RATEFestive campaigns frequently advertise interest rates starting at a particular level.
But a starting rate does not necessarily mean every applicant will qualify for it.Shetty says borrowers should confirm whether they qualify for the advertised rate, as the final offer may depend on their credit score, income, loan amount and tenure.They should also establish whether the loan carries a fixed or floating interest rate. A fixed rate stays the same, while a floating rate can change over time.
Processing, documentation and valuation charges can add to the upfront cost, while conditions attached to insurance or other bundled products may affect the overall benefit.For borrowers considering offers that promise to finance the entire purchase, Shetty advises checking whether the financing covers the full on-road price or only a portion of it.The loan summary sheet is an important document to review because it brings together details of the loan and its costs. Consumers should also examine the sanction letter and loan agreement before accepting the offer.A lower interest rate alone is not enough to establish which loan is cheaper.
The amount borrowed, repayment period, fees and other conditions all matter.A LOWER EMI CAN MEAN PAYING MORE OVER TIMEOne of the easiest ways to make a loan look affordable is to stretch its repayment period. A longer tenure can bring down the monthly instalment, but it can also increase the total interest paid.This is why borrowers comparing two festive offers should use the same loan amount and repayment tenure wherever possible.“If two lenders offer different rates, tenures and fee waivers, compare the total cost of each loan for the same amount borrowed,” Shetty says.He advises borrowers to add up all monthly instalments, processing fees, insurance and other charges, and then subtract the amount borrowed.
The lower figure represents the cheaper loan, provided the comparison includes all relevant costs.Lenders also provide a loan summary sheet showing the overall yearly cost, which can help consumers compare offers more quickly.“Be careful with longer repayment periods: they reduce the monthly instalment but increase the total interest paid. A smaller instalment does not always mean a cheaper loan,” he says.Consumers who expect to repay a loan early should also check the applicable foreclosure terms and any charges that may arise.READ THE FINE PRINT BEFORE PAYING A BOOKING AMOUNTThe next step is to establish whether the advertised benefit will be honoured under the terms the borrower is being asked to sign.A processing-fee waiver, for instance, may cover only that particular fee and not other charges.
An interest-rate concession may apply for a limited period or only to eligible borrowers. A discount may be immediate or credited later as cashback.Batra says the benefit advertised should be clearly reflected in the loan documents.“Check whether the waiver is complete or capped, whether the interest concession is for the entire tenure, and whether the discount is immediate or will come as cashback later,” he says.His advice is to ask the lender for a written calculation showing the total payment with and without the festive offer.
If there is a difference between what was promised and what appears in the documents, it should be corrected before the borrower proceeds.Batra adds that conditional offers are not inherently problematic. The issue is whether the conditions are disclosed fairly before a consumer pays or commits to the purchase.“If the headline says ‘zero interest’, but compulsory charges substantially change the cost, that needs scrutiny.
Similarly, eligibility restrictions should not emerge only after the booking amount has been paid,” he says.“Merely writing ‘terms and conditions apply’ does not answer everything. The fine print cannot be used to take away the substance of what the advertisement promises.”Consumers should therefore retain the advertisement, written quotation and offer documents, and seek clarification on any condition they do not understand before making a payment.WHAT IF THE PROMISED BENEFIT IS NOT HONOURED?If a lender or dealer does not provide a benefit that was promised, borrowers should document the issue immediately rather than rely on verbal assurances.Batra advises consumers to write to both the lender and the dealer, explaining what was promised and asking why the benefit has been denied.They should retain advertisements, screenshots, WhatsApp messages, emails, payment receipts and loan documents.
Evidence that they fulfilled the offer's conditions is also important. If the assurance was given over a phone call, Batra recommends following it up with an email recording the conversation.“If there is a difference between what was promised and what is being signed, have it corrected before proceeding,” he says.Consumers who believe an offer has been misrepresented can first approach the lender's grievance officer and the dealer's management.Depending on the nature of the dispute, they may also approach the RBI Ombudsman if the lender is covered by the applicable scheme, contact the National Consumer Helpline on 1915, or approach the relevant consumer commission.
Misleading advertisements can also be brought to the attention of the Central Consumer Protection Authority.The appropriate route will depend on the circumstances, the lender's regulatory status and the nature of the complaint.BEFORE YOU TAKE THAT FESTIVE LOANThe festive season can be a reasonable time to make a planned purchase, particularly if a genuine offer reduces the cost of borrowing. But the calendar, an auspicious date or the availability of a bonus should not be the only reasons to take on a long-term financial commitment.Before accepting a loan, consumers should compare the total repayment amount, check all fees and conditions, confirm the benefit in writing and assess whether the EMI fits comfortably within their budget.As Shetty points out, the decision to buy now or later should rest on need, savings and repayment capacity rather than festive timing alone.The most useful festive offer, therefore, is not necessarily the one with the lowest advertised rate or the smallest EMI.
It is the one that delivers a clear, verifiable saving without putting the household budget under strain.(Disclaimer: The views, opinions, recommendations, and suggestions expressed by experts/brokerages in this article are their own and do not reflect the views of the India Today Group. It is advisable to consult a qualified broker or financial advisor before making any actual investment or trading choices.)- Ends