If you want to buy a car, you have to make a few decisions, such as rebate vs. low-interest financing for cars. The most important decision is which brand and model you want to buy. With a large number of car manufacturers in India, the choice becomes even tougher.
To attract car buyers like you, car manufacturers and dealers offer lucrative offers and incentives on new cars. The two most common are “discounts on the vehicle price” and “low-interest financing.” Taking advantage of these offers can save you a lot of money when buying a car.
Related: How to get a car loan without income proof
Discount or low-interest financing, which do you choose?
The problem with the two most common forms of car incentives offered by car dealers is that most car manufacturers only allow one offer per purchase. You have to decide whether you want a discount on the price of your car or low-interest financing.
To make the right decision, you need to evaluate and compare the financial benefits you would receive. It is helpful to compare rebate vs. low-interest financing for cars precisely. Make sure you understand the two terms correctly Discount means a one-time discount given by the manufacturer or dealer on the total purchase price of the vehicle.
The discount amount varies depending on the brand and model, but it is usually between Rs 5,000 to Rs 50,000. However, low-interest financing allows you to get a car loan at a lower interest rate. Hence, they offer low-interest car loans if you buy a car from certain companies.
Some lenders offer up to 0% financing on new cars. Do the math. Find out which offer will give you the most financial benefit. Discounts on new cars may lower the purchase price of the car, but if you buy a car on credit, low-interest financing reduces your monthly payments. If you get a low-interest loan, you need to calculate how much benefit you can get from it.
Example: If you buy a car for Rs 1 million, the dealer may offer you a discount of Rs 25,000 or lend you an 8% interest instead of 9%. If you take a loan of Rs 8 lakh for five years, the total interest on the loan will be Rs 1, 96,401 at 9% and Rs 1, 73,267 at 8%. The difference is Rs 23,134. Hence, availing discounts in this case would be the better option.
In summary
Both discounts and low-interest financing can help you save money while buying a new car. However, if you have to choose between them, you should calculate and compare the financial benefits you will get.
You can also opt for discounts or look for car loan options with the best interest rates, for example, car loans with variable interest rates and convenient contract tenures from CarYanams Car Finance.
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