If you’ve been scouring the market for a new car, you may have come across attractive offers – club the car purchase with insurance and car loan and get a fabulous deal. Car dealers usually have tie-ups with an insurance company as well as a financing firm and tend to push the products which fetch them a good margin. They typically bundle these three products and entice customers with the prospect of discounts on the package deal. But do these discounts really translate into savings for you? Not really. In fact, the opposite may be true.

If the dealer claims to give a good discount on the insurance premium, he would usually make up for it on some other component of the package – for instance lower discount on the price of the car. Similarly, the dealer may choose to factor in a discount from the car manufacturer which is meant to be offered to the customer into the loan cost. This makes the EMIs appear lower than the stand-alone rate offered by banks. But this also means you end up losing out on cash discount on the down-payment for the car. You don’t really save because the cost is built into the package to make sure the dealer recovers a stipulated amount.

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