Buying a NEW Car ?

The customer is King.

The automobile industry is getting more competitive day by day and now we can get all the international brand cars in a showrooms near by. Now if we just start thinking about buying car, we can expect a call from a car dealer. As this is the second most expensive purchase that most of us going to do in our life, let me just list some of the forethoughts and road map that we take while doing a car purchase.

1. Mind Work

1.1 Budget.
 Do some research about every brands value depreciation by looking at used car value in our city. Also try to collect information about fuel efficiency, service costs and insurance premiums. Also understand the terms EMI, Auto Loan, things needed for an auto loan, Banks with lowest interest rate, Floating Vs Fixed interest rate etc.

As per financial experts one can set the car budget equivalent to ones annual salary. Also its better to plan and save enough money say 50% or more as down payment before buying a car. Keep in mind CAR is a liability, 25% of its value will be reduced on the next day of the delivery. Another 10-20% will be reduced every year.

1.2 The right car:
Once the budget is ready we need to decide what sort of car best meets our needs. If our family is of four members there is no need to buy a large MUV like the Toyota Innova. Also consider how long we plan to keep our car and how our needs may change with time, kids can make a big difference here. Its always better to keep a new car for atleast for 8 to 10 years. So analyze our needs before we decide on a car.

1.3 Diesel or petrol:
This can be decide based on our future running per day. If we are doing more than 70 km per day diesel engine will be suitable and other wise chose only petrol engine. This is because Diesel engines are usually 1 lakh + more costly than petrol engine. Considering this and the difference in petrol and diesel price can be compensated in 3-4 years if the daily running of the car is more than 70 km.

2. Test Drive

2.1 Do it yourself:
Never buy a car jsut on our relatives opinion, even if it is that of an automotive expert. What is right for someone else may not be right for us; check details like the comfort of the driving position, engine responsiveness, boot space. A one-kilometer test drive may not be enough, go for a comprehensive test drive in traffic, on open roads and up and down hills.

Check turning radius, visibility and cornering efficiency etc. Even if you are not inclined toward any other choices, just do a test drive so that you may not regret in future.
  
2.2 Take a second opinion:
It can be valuable to bring a friend who own any car [better a different brand car] with you on the test drive. They can offer unbiased comments or opinions that will help you in making the right decision.

2.3 Everything in writing:
It’s a common practice that the dealers marketing agent to promise discounts, free accessories etc, but not deliver on the delivery day. Make certain that every commitment made by the dealer is written down and signed on their letter-head. The agent usually have a quota for free accessories for each customer. If we are smart we can get the maximum discount and accessories.

Its better to make then write the cost of all free accessories and ask for that much cash discount. With that discount you can select better accessories from a good accessories shop.

3. Fix the Deal

3.1 Shop around:
For the best deal, nothing can replace comparing one offer against another. Do research on dealers discounts, manufacturer price cuts, free accessories etc. You should also consider calling Sales Agents from different dealers for a quote, they work in a close collaboration with dealerships and survive on fringe margins.

3.2 Buy insurance ourself:
Dealerships got 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.

3.3 No Claim Bonus (NCB):
The NCB of our old car can be utilized while taking insurance for the new car. The old car must be sold or transferred to make this possible, this will save thousands on insurance premium. We can use the NCB even for any succeeding insurance premium but only once. So don't rush to sell your old car at a lower price to claim this benefit.

3.4  Exchange Bonus:
Once you have sell or exchanged your old car, just keep a copy of old RC book and New RC book and apply for exchange bonus. You can get this benefit within 6 months from the purchase of the new car. This will also save few thousands.

3.5 Check before registration:
You must do a pre-delivery checking before sending you car the Regional Transport Authority for registration. Always check for any dents, scratches, overall working etc and also note down the engine number. Once it is registered its your liability. Also its better to make the dealer to complete the registration formalities as doing that ourself will be a big headache. You can see a detailed Pre delivery check list at http://mytipstowardswealthy.blogspot.com/2010/09/pre-delivery-check-list-for-your-new.html

3.6 Accessories:
If you are buying accessories from showroom always compare prices between the showroom and accessories shop. Some dealerships used to charge 2-3 time more prices. Also verify the quality and brand of accessories.