Don't be fooled.
One time I was walking down the mall when a lady in a suit approached me.
She handed me a coupon and said they were giving away a P5,000 voucher if I signed up for their insurance company. I’d even be qualified for a trip to Hong Kong if I signed up in that exact moment.
Does that sound familiar to you?
Free (adverb) - without cost or payment
Well that’s easy enough to understand.
In that case, how do businesses come up with “free stuff” when they were built to make money in the first place?
Simple. It’s not actually free.
Big companies usually pull off these offers to pull in more customers. Whether it’s “free” cash, “free” phones, or “free” insurance, there’s always a hidden fee (or fees) waiting behind that shiny new gadget or car.
Ever thought to yourself, “wow these banks sure are generous with their promos”?
From housing loans that offer freebies like a free TV to an entire kitchen showcase, you’ll be curious as to how they could afford “losing” that much money just to help you out get that loan.
But the moment you ask for a loan rate discount, the freebies start disappearing.
That’s because your entire “free” P32,500 LED TV was split into 36 payments throughout your 36-month loan. Surprise!
Their secret: The total cost for freebies is spread out throughout the entire amortization schedule, at a fixed loan rate.
Try Bank Car Loans as well with their 1-Year Free Car Insurance promos. You’d think that you’d be saving a lot of money for a year, but the reality is that the cost of free insurance is spread over the loan terms (same as housing loans above). What’s worse is if the bank is in partnership with the insurance company, you’ll be forced to sign up to their Lock In Period from anywhere from 3 to 5 years. You’ll be unable to ask for a discount on your insurance premium as they’ll be needing to recover the 1st year of “free” insurance.
Brand New Cars (All-in Promos)
Ever gone to a mall and saw that with just P5,000, you could walk out of it with a brand new car?
That’s because of all the hype around All-In Promos with Low Downpayments by car dealers.
A free year of insurance, 3 years of LTO registration, chattel mortgage, car tint, seat covers, etc. These are just some of the freebies included in the promo.
Here’s where it gets interesting though.
Two things: total cost and car insurance.
Postpaid Plans (Free iPhones)
So you want that new iPhone 7. How much does it cost upfront? A low low price of P37,990.
You say to yourself, ‘Okay. This won’t work’.
So you start looking up online and see that Globe is offering it for free at P2,399 a month.
You tell yourself, “Well, that’s how much I spend every month on data, calls, and texting, so I guess, why not!?”.
First off, if you spend P2,399 a month on data, calls, and texting, you need to re-prioritize your spending habits. Seriously.
Second, let’s do the math. P2,399 over a 24-month contract costs around P57,576.
Take away the phone from the plan and opt-in to just the 11GB data + unli calls and sms package and you’ll only spend around P1,299 a month. That’s P31,176 for a 24-month contract.
P57,576 - P31,176 = P26,400 for the iPhone 7. Just P11,590 shy of getting the phone upfront. Not that “free” now ain’t it?
With all the perks that telcos usually offer with postpaid plans, you’d think the freebies would be able to make up for the added cost. But try to compare it first with prepaid promos and postpaid plans with no “free” phones before you make a purchase.
You might find out that you weren’t really able to save at all.
There’s no such as a free lunch nowadays. Think twice before biting into that “free” promo that banks, car dealers, or telcos are talking about.
Try doing the math first to see if you’re actually saving up vs. more direct methods of buying. Keep probing, and don’t just settle with what a sales agent is saying, most of them will trick you into spending more.
Sometimes you’ll find out that you might be able to save yourselves from tens to hundreds of thousands of pesos if you just become an educated buyer, or have someone you can trust to really answer your questions.
Need a partner you can trust for your everyday buying journeys?
One Source Solution Insurance Agency Corp.
Our business is to provide you with all of the insurance solutions you and your business will need. Don't be stressed with too much worries, wake up without mental stress. Take out an insurance program for your business or for yourself to give you the peace of mind in your day to day activities.
"The only insurance agency you would partner with to provide all your insurance solution"