Decoding Tata Motors' Rs 789 EMI scheme; is it as good as it sounds

The festive season is here and auto makers do not want to be left out of an opportunity to hit those sales targets through some attractive offers and discounts. Tata Motors, India's indigenous car brand, has partnered with HDFC Bank to make an offer, which seems irresistible on paper. For instance, being able to own a car by just paying Rs 789 EMI per lakh does sound tempting for anyone who has been planning to pick a new car this year.

Tata Motors is offering two schemes, the 'Gradual Step Up Scheme' and the 'TML Flexi Drive', which promise to make buying Tata's passenger vehicles easier than ever. The offers are valid through November 2020 and are applicable on the entire range of BS VI vehicles, including SUVs and EVs.

What are the highlights of the offers?

The Gradual Step Up Scheme allows customers to enjoy EMIs as low as Rs 799 per lakh per month at an attractive interest rate. Under this scheme, the EMIs gradually increase over a period of 2 years based on the payment convenience of the buyer. This is to fast track the buying process for customers who wouldn't have to worry about paying high amounts as EMIs at a time when the markets are hit by COVID-19, businesses are low and salary cuts are seen everywhere.

The Flexi Drive Scheme, on the other hand, lets the consumers choose any 3 months every year to pay a minimum EMI of Rs 789 per lakh per month. So instead of defaulting on loan repayments, consumers can choose for a really low EMI and still be in the good books of creditors.

Tata Motors is offering up to 100 percent ex-showroom funding on the entire passenger vehicle range, loan up to 5 years under both schemes.

Are the offers as good as they seem?

Sure, both the new schemes offered by Tata Motors are good. But buyers might easily be confused as they might read Rs 789 EMIs as the flat-rate one must pay after buying the car. We've mentioned clearly in the copy above that it is Rs 789 or Rs 799 per lakh per month. Wondering what's the difference? Well, the EMI per lakh per month means the base cost will be multiplied by the number of lakhs of your car value. For instance, if your car costs Rs 10 lakh, the lowest EMI will be ten times Rs 789 or Rs 799. Yes, close to Rs 8,000. So when you read the offer, be sure to pause and give it a thought.

Now, another important detail is that you won't be paying Rs 789 per lakh per month throughout your tenure. Yes, we mentioned that too. Under the Flexi Drive Scheme, you get three chances in a year to pay that low (yet not so low) EMI and the Gradual Step Up scheme will increase your EMI over a period of 2 years. This is how you'll be able to cover the cost of the car and pay up that sweet interest over the course of your loan tenure. We'll let you be the judge of how great these offers really are, but if you ask us, the flexibility option is certainly welcoming considering the current economic situation.