Scrappage Incentive: How Will the Car Be Financed?
A tax advantage may cut the sticker price of a car, but loan interest can push the total cost straight back up. Incentive and financing have to be seen in one calculation.
A tax advantage may cut the sticker price of a car, but loan interest can push the total cost straight back up. Incentive and financing have to be seen in one calculation. In this article we take the subject beyond the headline and turn it into a financial framework a decision-maker can actually use.
First things first: a proposal is not an incentive in force
When weighing news about a scrappage incentive, whether the measure has actually been enacted and on what terms should be confirmed from official sources. This article sets out the financing logic of a possible incentive scenario.
Not the price of the car but the total repayment
Net vehicle price less deposit is the amount to be financed. On top of that, loan interest, arrangement and related charges and insurance have to be added to arrive at the total cost of ownership.
How to think about a TRY 1,5 million car
Even assuming the price falls after the incentive, if most of the remaining amount is financed with a loan the total repayment can climb back to a high level. Different deposit and tenor scenarios therefore have to be compared.
The limit on the monthly instalment
A vehicle instalment should not exceed the free cash flow of the household or the business. Running costs such as fuel, maintenance, insurance, tax and parking also belong in the monthly budget.
A decision check
Is the incentive certain? Is the vehicle genuinely needed? Is there still an emergency fund after the deposit? What is the total cost of the loan? Is the total cost of a used alternative lower?
Conclusion
A sound financial decision does not come from following a single ratio or a headline; it comes from comparing cash flow, total cost, risk, maturity and alternatives in the same table. Where the subject rests on a current regulation or campaign, the official terms should be confirmed before you act.
This content is general financial information. Current rates, campaigns, legislation, tax, incentives and market measures should be confirmed with the relevant official institution before any transaction or application.
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