We all want to buy the car some day or the other, but tend to ignore the financial implications arising out of the same. Most of us do not pay much attention to the excessive price charged by the dealer in terms of ex-showroom price, insurance, registration, etc. Further, you may fall into the manoeuvre of dealers who try to get the most out of you in terms of interest on car loan by insisting you to go for a longer lending tenure. The long repayment period does shorten the amount of equated monthly installments (EMIs), but the interest outgo from the same is huge. For instance, total interest on car loan of Rs 5 lacs for 5 years amounts to Rs 1,37,211 and goes up to Rs 1,97,250 for 7 years on the same amount from HDFC Bank at the minimum interest rate of 10%. So when it comes to car, there is a need to focus on the right deal and the right time. Following are the tips to ensure the same.
Assess your financial stability before taking car loan-Assess your financial viability and stability before approaching the bank and other financial institutions for car loan. Make sure you have sufficient bank balance to make a big down payment so as to reduce the reduce the burden of long period of EMIs, which leads to pay much more in terms of interest outgo. Moment you get the right financial standing, take the loan to buy the car.
Apply for car loan when get the right deal-Even as buying car is a smaller investment option compared to home, but it can pinch your pocket dearly with a massive down payment with increasing EMIs. As car loan is given for a maximum period of 7 years, you can expect the EMIs to be higher compared to home loan, which is given up to a period of up to 30 years. So when you get the right deal from the bank, make sure you buy the car at that time.
Keep an eye on festive discounts-Take the benefit of discounts during the festive season as most cars are sold during that time. Dealers launch a series of discounts to catch the public eye during the festive season that starts from Rakshabandhan in August to continue till New Year to Holi These discounts can help you save some amount on buying the car.
Wait for launch of new cars-As new car launches have become a regular phenomenon throughout the year in India, you can wait for the roll out of the car that will fit into your budget. For example, Renault Kwid, powered by 1.0 litre petrol engine, was recently showcased in the Auto Expo 2016 held at Greater Noida, Uttar Pradesh. The model, with a price range of Rs 2.6-3.67 lacs, is slated for launch in June 2016. The car, I guess, will fit into the budget of most people with monthly income of around Rs 20K-30K if they opt for suitable car loan option.
Month end-Often it is found that dealers come up with discounts at the end of the month on certain car models to meet sales targets. But it may not happen in all the months as demand for cars can be high in a particular time period, prompting the dealers to do away with discounts. So, you need to keep an eye on the lean season and try to crack a good a car deal with the dealer at the month end.
Replace old cars via exchange offers-It may happen that you feel the need to the replace the old car with a new one. You can do that with the exchange schemes offered a lot of dealers during the lean season to clear the stock pile and increase the sales of the car. Choose the right option to get the new car from the dealer by exchanging your old car. Make sure you ask for Form 22 issued by the car manufacturer, wherein you can see information like vehicle manufacturing date, vehicle identification number (VIN), chassis & engine number to know whether the car offered to you is a new or not.