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Dealer Car Finance Options...

27 January 2016, 02:44 PM

As the time is progressing, the purchasing power of people is increasing and hence, possession of the vehicle has become a priority. Daily, several people in India purchase a car. However, they have to ensure that their money is going in the right person’s pocket. After all, increase in purchasing power does not give you a license to become a spendthrift. Therefore, every car buyer should assess each of the dealer car finance options before purchasing a car from a dealer. Car finance in India is a major task to deal with.

There are three dealer car finance options for the consumer to deal with car finance in India. They lay the basic and the most optimized available option as to how to finance a used car from a dealer.

Purchase based on contract:

  1. This type of finance through a car dealer is best for the people who want simplest of the finance options.

  2. The annual percentage rate is in the range of 7% to 13%.

The procedure works as follows:

  1. An initial deposit, which is about 10% of the car’s price, is to be paid.

  2. Then the remaining amount with interest, in monthly installments is paid to the dealer.

  3. There is normally an administration fee associated with the first payment. An ‘option to purchase’ fee is normally associated with the final payment.

  4. High purchase ensures high consumer protection than unsecured consumer plan.

  5. The main drawback of this dealer car finance options scheme is that a person does not own a car till the end of the contract.

0% finance:

  1. This type of finance through a car dealer is best for the people who can make a large deposit.

  2. A hefty deposit of around 35% to 40% car’s price is to be made and then the rest of the money is paid as interest-free monthly installments.

  3. The main disadvantages are that the monthly payments are higher, and there is no scope of discount.


  1. This type of finance through a car dealer is best for the people who want to own a new car regularly without facing any hurdle in owning it.

  2. The monthly payments are in a certain range.

  3. Your desired vehicle, its desired duration, and the desired annual mileage determine how much a person has to spend on monthly payments.

  4. The main disadvantage is that few months rental advance is to be paid.

These three ways allow us to deal with car finance in India.

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