It’s a buyers market out there and the ball is no longer in the dealerships’ court. Gone are the days of the Premier Padmini and the Hindustan Ambassador being your only choices for a new car. With most major international brands available in a showroom near you, it’s never been a better time to buy a car.
Step One : Homework
The purchase price is only the tip of the iceberg when it comes to total cost of ownership. Research a car’s future depreciation by looking at used car values in your city and make a point of finding information on fuel efficiency, service costs and insurance premiums.
- The right car:
After deciding on your price range you should outline what sort of car best meets your needs – if you are a family of two you shouldn’t bother buying a large MUV like the Toyota Innova. With a growing range of makes and models you will probably find that several cars fit your budget. Consider how long you plan to keep your car and how your needs may change with time – kids (future) can make a big difference here. Analyze your needs before you decide on a car.
- New or used:
Because of high depreciation rates there are many mouth-watering deals available on used cars.
- Diesel or petrol:
Common-rail technology has brought diesels to a level of performance and reliability that is at least equal to that of petrol cars. New age diesels are lightning fast, super efficient and offer better drivability than petrols, but there is a price premium to pay. Some diesels can work out cheaper if you view them from an EMI’s perspective (EMI + monthly running cost).
It is highly recommended that safety options such as ABS (anti-lock braking system), airbags and traction control systems. Consider cars that offer these options; ABS + airbags are becoming popular even amongst hatchbacks! Understandably, these life-saving features will cost extra. In our opinion, they are well worth it.
- Newer generations:
In most cases, don’t buy a car model that is about to be discontinued – you’ll regret it when you need to find spares and your accountant won’t like the resale value either. Car models are marginally improved each year with significant model upgrades every 4 to 5 years.
- Manufacturer research:
Many Daewoo Cielo and Peugeot 309 owners regret buying their cars just before the manufacturer closed shop in India. Find information about the manufacturer’s business in India before you sign on the dotted line.
- Use the “pinch of salt” rule:
Advertisements and salesmen can be misleading sources of information and their claims should always be taken with a pinch of salt. Verify important points with car owners and look within the Team-BHP forum for first-hand reviews.
- Avoid unauthorized dealerships:
Unauthorized car dealers have some tempting advertisements offering very low prices. Do not buy from an unofficial dealership; shady practices pay the bills for most of these companies and you will likely end up paying the price difference in maintenance / other headaches in the long run.
- The best time:
Periods like Shraad are dry seasons for dealerships; many buyers stay away for superstitious reasons making it a good time for a discount. Unless you are buying a car in your company’s name and must buy at a certain time for depreciation benefits, shop around during these dry spells. Even so, you should avoid buying a car in December; by waiting less than a month your car will be a year newer on paper.
Step Two : The Test Drive
- Test drive yourself:
Never buy a car based solely on someone else’s opinion, even if it is that of a world-renowned automotive expert. What is right for someone else may not be right for you; think about details like the comfort of the driving position and engine responsiveness. A one-kilometer test drive will reveal nothing – go for a comprehensive test drive in traffic, on open roads and up and down hills. Even if you are not inclined toward other choices in the market, drive them anyway. Sometimes the best buys can be found in the least expected places.
- Second opinion:
It can be valuable to bring a friend or relative with you on the test drive, even if they have only a basic knowledge of cars. They can offer unbiased comments or opinions that will help you in making the right decision.
- Everything in writing:
It’s common practice with car dealerships to promise the world (discounts, free accessories, etc.) but not deliver on closing day. Make certain that every commitment made by the dealer is written down and signed on their letter-head.
Step Three : Sealing the Deal
- Shop around:
If you want the best deal, nothing can replace pitting one offer against another by shopping around. Do research on what discounts are available and ask about manufacturer specials and impending price cuts. You should also consider calling a Direct Sales Agent for a quote; they work in a close collaboration with dealerships and survive on wafer thin margins.
- Finance deals:
Shopping around for financing can also uncover fabulous deals. Make a point of checking the actual interest rate rather than the quoted one – you’ll be surprised at the discrepancies this can reveal
- Loan against fixed deposits:
If you or your family has invested in fixed deposits, you are in luck. Taking a loan against fixed deposits leads to very lucrative interest rates, minimal paperwork (if at all) and flexible repayment plans. Banks usually give loans against fixed deposits at a +1 interest rate.
- Considered Leasing?
Some corporates / businessmen may realize more benefits from leasing rather than financing. To view the Team-BHP article on the pros and cons of a lease, view this article:
If you want to exchange your old car, don’t tell the salesperson until the deal on the new car is finalized. This will prevent you fighting a two-front war to hold the dealership from buying your old car at the lowest price and selling your new car at the highest. Dealerships make a lot of money on used car sales.
- Buy insurance yourself:
Dealerships profit from fat commissions on every insurance policy sold. Don’t buy insurance coverage from the showroom; instead, shop around and take quotes from 3 – 4 insurance companies / agents. You stand to save anywhere between 20 – 40% on insurance by shopping yourself and bypassing the dealer here.
- No Claim Bonus (NCB):
Simply put, the NCB lets you transfer the insurance premium benefits of your old car to your new one if you have made no damage claims. Your old car must be sold or transferred to make this possible, but the NCB alone will save thousands on the purchase cost of your car.
- Zero depreciation insurance:
If you are buying a premium car, it would be wise to opt for zero depreciation car insurance. After all, premium cars are equipped with premium-priced parts.
- Check before registration:
It’s a good idea to physically check your car before it is sent to the Regional Transport Authority for registration. Patching up a damaged car and selling it as new is not unknown even at authorized dealerships. To view the entire pre-delivery checklist, click HERE.
- Registration in other states:
This is a very popular trick, especially in cities like Mumbai where buyers register their cars in neighbouring towns like Thane to save money. We don’t recommend this practice – the law will eventually catch up with you.
- Service station monopolies:
This is relevant for buyers from smaller cities and towns where there may be only one authorized service center for a particular brand. In most cases these monopoly players exploit customers with their high-handed attitudes. Search within the Team-BHP forums for the service experiences of actual owners from your city.
- Extended warranties:
Extended coverage for your new car is always a good idea. Even the most reliable cars have occasional defects and parts for modern cars can be tremendously expensive to replace.
Crosscheck accessory prices between the showroom and after-market dealers. Some authorized dealerships charge as much as Rs.4,000 for sun film on a hatchback, while an after-market option costs only Rs.1,200. Dealerships make a lot of money on accessories. If the dealership is bundling free accessories, verify their quality and brand.
Step Four : Post-delivery
- Upsizing tyres:
If you want to install better tyres on your car for safety or performance reasons, do so as soon as possible. Drive straight into a reliable tyre shop to buy performance tyres and get the best possible exchange price for your unused standard tyres.
Be sure to carefully run-in your new car engine