Car buying is like getting married. The day you decide to go ahead with either of the two, all kinds of advice pour in. From parents, relatives, distant uncles, pesky neighbours, even your local barber, the opinions can be multiple and quite often, confusing. In fact, getting married can be relatively easier.
Unless you have plenty of money to burn, the decision to buy a car can’t be a spontaneous one like saying yes to marriage proposal. It needs a lot of research, number crunching to find the right ride that suits your taste and cushions the blow to your wallet. Which is why it is often tough to ignore the noise. But despite all the due diligence, many of us do end up shortchanged at the dealership, needlessly paying for extras and often rueing at the wise choices our friends, colleagues make when they buy a car. So, before you dive into the details of owning a ride, you need to get a fix on four common car-buying rules.
1) Don’t take that discount:
Car firms dole out discounts during this festive time that would put Santa Claus to shame. Most of them are juicy enough to not avoid. What you need to understand is that it’s just a ruse by firms to clear their inventories before they hike the prices and launch new models in January. If you buy in December 2014, it automatically becomes last year’s model the moment you hit January. If you are planning to switch to a new ride in the next four years then you should wait for January. Discount or no discount, a 2014 model will fetch you a lower resale price in four years.
2) Don’t go for the low EMI option:
Your dream car’s EMIs depend on 3 factors: the down payment, tenure and the rate of interest. When you dealer says we are offering the lowest EMI, DON’T go for it. The option is full of riders. Lowest EMI means longer tenure. When you borrow to buy your car, your repayment is made of two components — interest and principal. As the tenure goes up, the repayment burden on the interest amount shoots up.
3) Don’t stretch your wallet:
Your dream car’s price should not more than 60% of your annual take home salary. If your take home is 60,000 a month, don’t think of buying a ride more than 4.32 lakh. Also your EMI should not be more than 15% of your post-tax monthly income. Look for options without prepayment charge. Some banks, including State Bank of India, Bank of Baroda, Bank of India, Federal Bank and Canara Bank, don’t have a prepayment charge, while some other banks, including HDFC Bank Ltd, Axis Bank Ltd and ICICI Bank Ltd, do.
4) Don’t go for that fuel trap:
Petrol may pinch your pocket but petrol cars are cheaper. Diesel variants of cars are costlier by Rs 75,000 to a lakh. Your choice should depend on how much driving you do. If you do 80 km every day then diesel is a good choice, if it’s just city driving then stick to petrol. Don’t pick the CNG tab, not only are they costly and cumbersome, they reduce the car’s resale value and occupy a lot of boot space.