New car cash vs finance
Yes, maybe. Sometimes the mother company (that makes the car) covers a bit of the loss that comes from the super-offer loan, so the dealer loses a bit less. But generally, you are right. you should be able to talk them into some rebate that gets you around the given number, depending on how good you are a negotiator (and how urgently they need to sell a car) "The question is about the dealer, right?  The dealer isn't providing this financing to you, Alfa is, and they're paying the dealer that same ""On the Road"" price when you finance the purchase.  So the dealer gets the same amount either way. The financing, through Alfa, means your payments go to Alfa.  And they're willing to give you 3,000 towards purchase of the car at the dealer in order to motivate those who can afford payments but not full cash for the car.  They end up selling more cars this way, keeping the factories busy and employees and stockholders happy along the way.  At least, that's how it's supposed to work out."
Jeremy Hughes Perth founded the largest online car loan provider in Australia with a successful exit. He is a good entrepreneur with skills in Business Planning, Strategic Planning, Marketing Strategy, Consumer Financing etc. If you want to buy a new car, you can check the guide and tips to get best deal on new car. Very generally speaking if you have a loan, in which something is used as collateral, the leader will likely require you to insure that collateral.   In your case that would be a car.  Yes certainly a lender will require you to insure the vehicle that they finance (Toyota or otherwise).  Of course, if you purchase a vehicle for cash (which is advisable anyway), then the insurance option is somewhat yours. Some states may require that a certain amount of coverage is carried on a registered vehicle.  However, you may be able to drop the collision, rental car, and other options from your policy saving you some money. So you buy a new car for cash ($25K or so) and store the thing.  What happens if the car suffers damage during storage?  Are you willing to save a few dollars to have the loss of an asset?  You will have to insure the thing in some way and I bet if you buy the proper policy the amount save will be very minimal. Sure you could drop the road side assistance, rental car, and some other options, during your storage time but that probably will not amount to a lot of money. I'm a finance manager at a dealership. The thing that I tell people about leasing:  It's good if you plan to make more money in the future. You can get a new car.  The downside of leasing. When you get out of your lease you will either pay straight cash, get another loan for the unit, or get a new unit. 3 years down the road you have no idea what interest rates will be. If you lock in your rate today you are guaranteed that rate. With the government increasing rates we could see higher rates that could cost you more.  Also if you get a loan today it will be 5-6 years. Leasing will have a 3 year lease with another 5-6 year loan on top of that. Causing to pay more in the long run  If your brother doesn't have straight cash to pay for it at the end of 3 years I recommend buying new If you are looking to build wealth, leasing is a bad idea.  But so is buying a new car.  All cars lose value once you buy them.  New cars lose anywhere between 30-60% of their value in the first 4 years of ownership. Buying a good quality, used car is the way to go if you are looking to build wealth.  And keeping the car for a while is also desirable.  Re-leasing every three years is no way to build wealth. The American Car Payment is probably the biggest factor holding many people back from building wealth.  Don't fall into the trap - buy a used car and drive it for as long as you can until the maintenance gets too pricey.  Then upgrade to a better used car, etc. If you cannot buy a car outright with cash, you cannot afford it.  Period. "They aren't actually. It appears to be a low interest rate, but it doesn't cover their true cost of capital. It is a sales tactic where they are raising the sticker price/principal of the car, which is subsidizing the true cost of the loan, likely 4% or higher. It would be hard to believe that the true cost of a car loan would be less than for a mortgage, as with a mortgage the bank can reclaim an asset that tends to rise in value, compared to a used car, which will have fallen in value. This is one reason why you can generally get a better price with cash, because there is a margin built in, in addition to the fact that with cash they get all their profit today versus a discount of future cash flows from a loan by dealing with a bank or other lending company. So if you could see the entire transaction from the ""inside"", the car company would not actually be making money. The government rate is also so low that it often barely covers inflation, much less operating costs and profit. This is why any time you see ""0% Financing!"", it is generally a sales tactic designed to get your attention. A company cannot actually acquire capital at 0% to lend to you at 0%, because even if the nominal interest rate were 0%, there is an opportunity cost, as you have observed. A portion of the sticker price is covering the real cost, and subsidizing the monthly payment." There are a few factors I like to consider when I'm reasoning financially over my households cars. How many KMs will the car travel each year because I like to factor in how often tires will need to be changed, how much tires for my models cost as well as how gas efficient they are. Knowing how much the car is driven and in what environmental/road conditions is also important factors to know because that will help guestimate possible repairs cost. Also possible taxes should be taken in to consideration. For example a few years ago I had a diesel Citroen C5 that had yearly taxes of roughly 500$. The replacement costs only 150$ a year in taxes. So switching cars 3 years early would have saved me 1050$ in taxes. So some information on possible taxes, how far you drive each year, what environmental conditions, type of driving (daily long rides or just short etc..) as well as the fuel efficiency of both cars would help to better calculate your costs for say three scenarios. Car change in 12, 24 and 32 months respectively. Full payment is always better than auto-loan if you are prudent with finances. I.E if you take a loan, you are factoring the EMI hence your savings will remain as is. However if you manage well, you can buy the car with cash and at the same time put aside the notional EMI as savings and investments. The other factor to consider is what return your cash is giving. If this more than auto-loan interest rate post taxes, you should opt for loan. For example if auto-loan is 10% and you are getting a return of 15% after taxes on investment then loan is better. Company Car lease depends on terms. More often you get break on taxes on the EMI component. But you have to buy at the end of lease period and re-register the car in your name, so there is additional cost. Some companies give lease at very favourable rates. Plus if you leave the job lease has to be broken and it becomes more expensive. Many reasons So in general you are paying more for peace of mind when you buy a new car. You expect everything to be working and if not you can take it back to the dealer to have them fix it for free.