Want a bigger discount? Borrow more

What about the interest rates? These are truly bewildering and can vary from as low as 9 per cent to 13 per cent per annum on a reducing balance method. The catch, it appears, lies in the cash discounts. While the usual interest rate is around 13 per cent for most cars, some dealers are not giving customers the full up-front discount, but are adjusting this to get a lower interest rate.

And then there’s the discounts offered by the finance companies to get your custom — since they earn money on each car that’s bought on finance, they’re parting with generous amounts to entice customers. Take the Esteem VX again. The basic discount on this is Rs 12,000. But if you take, from Delhi-based Competent Motors, a Rs 4.5 lakh loan for a 3-year period, the discount goes up to as much as Rs 29,500. Take a loan of a lesser Rs 2.5 lakh for the same period, and the discount also goes down, to Rs 24,770. A 2.9 lakh loan for 3 years on an Alto VXi fetches you a discount of Rs 19,700, but take a Rs 1.9 lakh loan instead, and your composite discount comes down to Rs 17,370.

Several companies, like Fiat and even Maruti, allow you to pre-pay your loan after a minimum period of six months. For this, you pay the balance off in one go, and around 2 per cent interest on each lakh that’s left of the principle loan.

Most B-segment cars — M800 deluxe, WagonR, Alto, Santro — can be bought by making a down-payment of as little as Rs 50,000.

In the C segment, Hyundai’s Accent is selling at Rs 12,000 discount. In case, you decide to avail it, your monthly EMI will be calculated at 13 per cent — but if you forego this, the rate of interest comes down to under 12 per cent. In the case of an Opel Corsa, apart from the cash discount of Rs 10,000, you get an additional 3 per cent of the loan as a discount if you get the car financed from the dealer itself. Factoring this into your EMI can see the interest rate fall to even 9 per cent, as compared to the average rate of 13 per cent. Other freebies include a car perfume, mud flaps, foot/dickey mats, car and seat cover on both the Opel Corsa and Astra models.

The Ford Ikon generally comes with the first year’s insurance free — that’s a saving of nearly Rs 16,000. You also get a cash discount of Rs 12,000 on this vehicle. Again, if this is factored in, the interest rate comes down dramatically.