How to Get the Best Deal for Your New Car
Cars these days are considered as a part of luxury status. For most people cars are intrinsically linked to their lives – be it going to earn their livelihood, or family shopping. Selecting a car is usually a combination of practicality, personal choice and budget. You may love the cute small car. You may love the big sleek car. Some decisions are made on practicality of parking, some on status reaffirmation and some simply based on the budget.
Once you have set your heart on the car you wish to buy how does one go about making it a reality?
The first step to getting a good deal is not a financial deal. Money is relative concept to value. At the end of the day what is more important is what you get for the money, however large or small the sum may be.
The first step therefore is to compare the features of the two or three shortlisted cars you have within the same price range. You then see which ones are your priority and which may be on the list but not very high on your list. You will then be able to shortlist and narrow your choice. But all this is on paper. Next step is the test drive.
Test drive really is the where you can safeguard against getting carried away by convincing advertising. You will actually experience the features that you were so looking forward in a car. Plus test drive gives you a sense of ‘something’ which you can’t explain but it’s a comfort factor of being where you truly belong. Test driving is also the place where you then can get a real sense of the value for money for the car.
Test driving is not just the driving experience – it’s also the time to look at the functional elements – lights, doors and windows, trunk and engine, and locks. You should also look at the trunk space, leg space and to look under the hood for the various indicators.
All this needs to be done even before the driving begins. Once the drive begins you can then check the brakes, the transition of the gears, the powering on acceleration, the control at high speeds, the handbrake on slopes and so on. Manual adjustments like seat belt and inclines on seats can also be then checked.
Test driving different models can give you a better sense because of the relativity of the experience.
We now come to the price. The festival season starting October is perfect timing for a car purchase. Most car manufactures build huge inventory to capitalize on the festive mood at festival time. They offer huge festival discounts to make it easier for people to buy the cars. With slow down in petrol cars more manufacturers are expected to incentivize petrol cars with discount this festive season (Though you should check out this Petrol Vs Diesel Car Decision Making Calculator).
In addition to a direct price discount, certain car manufacturers come with innovative schemes. For example a major car manufacturer announced a ‘petrol lock system’ that insulates customers from petrol hikes for a year if the car is bought in a specific time period.
But finalizing the price it is important to see possible ‘hidden costs’ like taxes, insurance and administrative costs. Please ask your dealer to explain each cost element to you before you agree for the price. Then once the price is locked ask for accessories than can be added free in case the discounts cannot be increased by the dealer.
This is also the time to look for special financial package for financing the cars. In addition to getting a good discount, there are deals to be made even on good financing packages if well negotiated and researched. The first thing to know here is that, banks normally fund not more than 90% of the requirement.
Before you sign any loan papers it is important to know the basics of car loans to get a good deal. You must ask if it is fixed rate interest or reducing balance interest. While one calculates it on the constant balance of the loan, the reducing balance calculates them on the balance at the end of each period as the repayment is made.
So if one gets two different quotes one fixed (or flat) and one reducing, calculate the complete interest payment on both assuming the same EMI payment. There are also the floating interest rates where interest rates can change – go up or down – depending on the RBI prime rate. So these questions have to be asked before taking any final decisions on loans.
So what is the kind of interest rates being charged for the loans? Certain banks offer only fixed rates. While most auto loan durations are for 5 years the rates could be as high as 15% for a less than 2 year duration and as low as 11% for 5 year tenure. This could vary from bank to bank.
The other thing to watch for is processing fee and if one can negotiate for lowering or waiver of processing fee, that’s another avenue for savings.
Compare loans from at least two or three institutions before you finalize your financing deal.
So there you have it – your guide to getting the best deal for you new car this festive season!