That car drops 1,500 € if you finance it and costs 4,073 € more

21,400 euros is what the car in this example costs in cash, and 19,900 if you finance it — but the loan pushes the bill up to 25,473 euros. The visible discount is 1,500 euros against the cash price, and the final extra cost comes to around 4,073 euros. Before you add insurance, servicing or an arrangement fee, the discount has already vanished.

The trick requires no fraud and no hidden figure. It is enough to show two parts of the deal in different sizes. The salesman writes 19,900 euros in large print and 354 euros a month underneath. You compare that 19,900 with the 21,400 of the cash price and feel you have just saved 1,500. The finance company and the dealership are doing a different sum: there may be a commercial commission for placing the loan, and the interest lets them recover the discount applied to the car.

Do the whole operation. The capital lent is 19,900 euros. The term is six years: 72 monthly payments. The nominal rate is 8.5 % a year. Calculated on what is left to repay, it produces a payment of 353.79 euros.

Multiply 353.79 by 72. The result is 25,472.87 euros. Subtract the 19,900 you were lent: you have paid 5,572.87 euros in interest. Now compare the financed total with the 21,400 euros of the cash price: you will hand over 4,072.87 euros more. That is 4,073 euros extra for accepting a discount of 1,500.

The calculation assumes a level payment, a fixed rate and no added charges: an arrangement fee or a compulsory insurance policy are added separately.

There remains the way out that most people imagine as soon as they understand the mechanism: sign the finance, get the low price and cancel the loan a few months later.

Spain's Law 16/2011 allows you to repay all or part of the loan early at any time. Its article 30 provides that the consumer is entitled to a reduction in the interest and costs corresponding to the time that will now not elapse. Where the rate is fixed, the compensation for cancelling may not exceed 1 % of the capital repaid if more than a year remains, or 0.5 % if a year or less remains. There is an exception: if the lender demonstrates direct losses from the cancellation it can claim more, but article 30 itself sets out how those are calculated and caps them, never above the interest you would have paid to the end.

Apply it to the car in the example. You pay twelve instalments of 353.79 euros, that is 4,245.48 euros, of which 1,589.62 is interest. In month thirteen you still owe 17,244.14 euros of capital. You cancel it and, if the contract applies the maximum 1 % compensation, you also pay 172.44 euros. On that basis the total is 21,662.06 euros. Against the 21,400 of the cash price, you have paid 262 euros more. On that basis, those 262 euros are the price of the manoeuvre, not the 4,073 of going all the way.

That legal compensation is one thing; giving back the commercial discount is another. Some promotions make the reduction conditional on the loan staying alive for a minimum period. That period may be several months, but there is no single legally fixed minimum term for every car: it is in the conditions of each campaign. If you cancel earlier, the dealership can reclaim the discount where a clear clause you accepted ties the price to that minimum period. Paying 172 euros to cancel does not protect you from a separate claim for 1,500.

That is why the 262 euros in the example only hold if the minimum period has already expired. If the campaign requires twelve months alive and you cancel in the eleventh, the sum that matters stops being the interest and becomes the discount they are reclaiming.

You do not have to do this sum by hand. Law 16/2011 requires the contract to state the total amount payable, which is the sum of the capital and of every cost you will pay for it, and to set it out alongside the rest of the pre-contractual information. It is the box that turns the offer into a figure comparable with the cash price, and it is exactly the one missing from the brochure they put in front of you. Ask for it by name.

Tomorrow, at the dealership, ask in writing for the cash price, the financed price and the total cost of the credit. And ask, in these words: "How long does the loan have to stay alive so that you don't reclaim the discount from me?"