Car Loan Truth: EIR vs "Flat Rate", Hidden Charges Checklist

Dealers love flat rates. You pay in EIR. Learn the difference and watch the fees that creep in.

Flat vs EIR

• Flat rate applies the rate to the entire principal for the full tenure. It understates the real cost.
• EIR reflects reducing balance and gives the true annual cost. Always ask for EIR and amortization schedule.

Hidden Costs To Check

• Processing fees, documentation, and GST.
• Insurance bundling and add‑ons you do not need. Compare with an external quote.
• Accessories financing, handling charges, and extended warranty financing. These bloat the loan.
• Foreclosure and part prepayment charges.

Tips

• Higher down payment reduces interest and upselling. Keep EMI within your FOIR comfort.
• Avoid clubbing add‑ons into the loan. Pay for them in cash only if essential.

Tools

• EMI Calculator: Compare EIR scenarios and prepayment impact.