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vipul_bscity · 26th July 2007, 16:57

Hi,
there used to be two types of discounts once you buy a car
1) Finance Discount
2) Dealer discount

Finance discount - this is the amount that the dealer gets on selling a car on loan and this is given the Bank which gives the loan to the dealer. Normally this used to be in the range of 3 - 3.5 % of the loan amount (varies from bank to bank). To attract and sell the cars the dealers used to pass this amount to Car buyers as a finance discount

Dealer discount - This is on the descretion of the car manufacturer and the dealer. To sell a particular model, they give sometimes some discounts. It can be either cash OR in kind(freebies - Seat covers, MP3 Units, Teflon, floor mats etc etc)

Once you take a loan, with the margin money (Downpayment), you also have to given them 1 EMI as advance. So if the loan is for 36 months, you pay the margin money and 1 EMI and you give post dated cheques/ ECS for rest 35 Months.

In your case the dealer might be adjusting the finance discount against your first EMI and in this case you only have to pay 35 EMI in case of 36 in total (if the loan is for 3 years).

Hope this helps.

26th July 2007, 16:57	#2 (permalink)
vipul_bscity Newbie Join Date: May 2006 Location: Mumbai Posts: 41	Hi, there used to be two types of discounts once you buy a car 1) Finance Discount 2) Dealer discount Finance discount - this is the amount that the dealer gets on selling a car on loan and this is given the Bank which gives the loan to the dealer. Normally this used to be in the range of 3 - 3.5 % of the loan amount (varies from bank to bank). To attract and sell the cars the dealers used to pass this amount to Car buyers as a finance discount Dealer discount - This is on the descretion of the car manufacturer and the dealer. To sell a particular model, they give sometimes some discounts. It can be either cash OR in kind(freebies - Seat covers, MP3 Units, Teflon, floor mats etc etc) Once you take a loan, with the margin money (Downpayment), you also have to given them 1 EMI as advance. So if the loan is for 36 months, you pay the margin money and 1 EMI and you give post dated cheques/ ECS for rest 35 Months. In your case the dealer might be adjusting the finance discount against your first EMI and in this case you only have to pay 35 EMI in case of 36 in total (if the loan is for 3 years). Hope this helps.