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Larissa Fernand offers some tips when purchasing a vehicle.
Timing of purchase matters
If you are self-employed, you can claim depreciation. Buying before March will get you a 10 per cent depreciation benefit, but if you buy before September, you can claim 20 per cent. Depreciation is on the ex-showroom price and not on the on-road price; thus, insurance and road tax charges won't be taken into account.
If you are thinking of making a purchase at the end of the year, hold on. Purchase it the following year so that should you decide to sell it, stating that you bought it in 2000 has a lead over a 1999 purchase.
Rates of interest vary depending on a host of factors
Interest rates vary depending on the scheme you opt for and for the model you are purchasing. Some players may charges a higher rate of interest for luxury cars, while others may lower their rate. A few players could change the rate of interest depending on the repayment tenure that you are seeking. Some may even be open to negotiating the interest rate with an insistent customer.
Extent of financing is another variable factor
A car with a high re-sale value will get a greater extent of financing. Buying an Ambassador, a Premier Padmini or a Contessa will get you just around 60 per cent of the cost financed by some, while others may not even extend finance for such cars. Don't measure up in terms of income, then the amount that they are willing to finance will drop. If you are a businessman and your income tax return does not reveal your actual income, a bank may not be as obliging as an NBFC. Approach them with your balance sheet and proof of other sources of income.
Second-hand car models may get more expensive financing
If you are buying a second-hand car, chances are that you will have difficulty obtaining finance. Your bank or NBFC may oblige you if you are a valued customer. But you may be faced with issues such as a higher rate of interest, a shorter repayment tenure or a higher down payment.
Criteria for qualification vary
Qualifying age varies from 21 right up to 70 years. Gross salary differs for a salaried employer and a self-employed individual, and could differ depending on the model being purchased. Some require a bank account for at least six months, others for a minimum of two years.
Negotiating with your car dealer is important
Everything is negotiable, the prices are not wholly controlled by the manufacturer. Don't settle for the first dealer you visit, shop around. The smaller dealers may be more obliging than the big players, offering more freebies in the form of a gold coin or a cell phone. Never buy accessories from a dealer, you will end up being fleeced. If he is offering accessories as an add-on, tell him to offer an equivalent discount in their place. Sometimes, schemes are held in conjunction with the manufacturer. In 1998, a dealer in Bombay offered a three-day stay in select hotels and a lucky draw for a Singapore trip if one purchased an Esteem from him. Others offered an exchange scheme where customers were allowed to bring in any old car and on appraisal, an amount would be deducted from the cost of a brand new Maruti. If buying a second-hand car visit a reputed dealer. Some give a warranty of three to six months and may even let you get your own mechanic to check out the car.
The type of car matters
If you plan to keep the vehicle for a short while, look at cars with a high re-sale value, like the Maruti 800. Luxury cars don't have a high re-sale value. Maintenance costs on a luxury car can be almost 50 per cent higher than those on a small car. Second-hand cars too may have higher maintenance costs.
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