Tuesday, June 17, 2008

Car Bazar - The Buying Procedure

Car Bazar - The Buying Procedure

Before you sign the cheque it is important to know opinions and views of people who are already using the same car (Read Owner's Feedback). Asking friends or other people who have used the car, is better than speaking to a car salesman. People tend to have a biased opinion so make sure you talk to more than one person.

Most car dealers offer you to test-drive a car before you buy it. Driving a car is always better than watching a hundred pictures and reading attractive brochures. You can get a good feel of how the car performs by getting into the driver’s seat, starting, driving, accelerating, turning, stopping and reversing.

Trained staff at the car dealerpoints can help you understand essential aspects of routine and special maintenance required. They can also explain the terms of the warranty offered by the manufacturer.

Once you have finalized the car, you can get the dealers Pro-forma invoice in your name. The proforma invoice gives details of all the costs involved. The basic cost of the car, the sales tax, the octroi if applicable, the RTO charges and the Insurance amount.

The price you pay for your car comprises of the following elements:

The F.O.R. price - This is the Ex’factory price of the car

Transportation and Transit Insurance - Cars manufactured outside Mumbai have to be transported (by truck trailers of railway rakes) from the factory to the dealer’s depot.

Depot / Stockyard charges - The cost involved in stocking and maintaining the car before actual delivery to the clients.

State Sales Tax - Maharashtra State Government collects a Sales Tax of 10% on the F.O.R. price. (Sales Tax charged varies from state to state. Maharashtra, Karnataka, Kerala and Madras are at the top end -9 to 10 percent, while Gujarat, Haryana, Calcutta, Goa are at low end with 3-4 percent. Earlier, several car owners registered their cars in Gujarat, Haryana, Madya Pradesh etc. and saved a substantial amount, as the sales tax in those states was lower, however today the State Government is more stringent.)

Octroi - All cars registered within the city’s municipal limits are subject to payment of octroi to the Municipal Corporation. An octroi of 4% is levied on cars registered in Mumbai city.

The above elements make the Ex-Showroom price of the car.

R.T.O - In Mumbai the R.T.O. now collects lifetime tax (One Time Tax of 3.5% of Ex’Showroom price, for individuals and 10.5% for Companies)

Insurance - All cars have to be insured before taking delivery. Insurance amount can vary as per the risk covered. Accessories like music systems can also be insured by paying a little more premium. The insurance amount for a comprehensive insurance policy works out roughly to 3.8% of the showroom price.

Competition among manufacturers / dealers works very vigorously. Dealers offer discounts, gifts, free accessories, additional free car services etc. It makes good sense to call two or more dealers before finalizing the best deal.

The Dealers services include the RTO Registration and the Insurance policy for the car. Be careful while informing the Name and Address in which the car is to be registered, as corrections in spellings and rectifying omissions can be a pain later. If you have owned a car earlier, you may prefer to use the services of your existing insurance officer/agent.

While taking delivery of your car, it makes sense to have a little extra time on hand. A rushed delivery can cause you to spend a lot of time later, for having overlooked minor fixes at the time of delivery.

Most cars are transported over long distances - from the production plant / factory to the dealers showroom.
Although a thorough pre-delivery inspection is conducted, you can spend some time checking the following:

The Instrument Panel - Check that the warning and indicator lights, the speedometer, fuel gauge and other gauges work proper. Check if the glove box lock works properly. Flick the wiper lever and turn signal lever and see that they work in all positions.

The Car Insides - The headrest, the seats, and the doortrims come with plastic covers and you can ask the dealer to help remove them. See how the rear seats fold and how to adjust the front seats. Check the interior lights. Put on the seat belts and adjust them properly.

Air Conditioning System - If the car is equipped with an A/C, it makes good sense to check that it works properly for all the positions of the A/C button. Check if the air comes out of all the vents provided.

Other Controls and Equipment - Check the doors, windows and the locks and see if there are any odd squeaks and sounds. Check the bonnet and the fuel cap lid cover levers.

Test the pressure while applying the hand brake and the pedal brake.

Lastly check the toolkit that comes with the car and ensure all items are present.

Car stereos, window weather strips and hub-caps have been the all time favorites, for petty thieves, and many new car owners have been shocked to see them missing, soon after the car rolls out of the showroom. The Dealer can secure them for you.

Most dealers conduct a comprehensive Pre-delivery inspection of the car, and look into every minute details of the car before it is delivered to you.

If you find anything broken, a cracked glass or scratched paint, you should ask the dealer to repair the same before taking delivery of the car. If the dealer cannot attend to your complaint and promises to satisfy you in future, you make sure that you collect a written note from the dealer, promising you to rectify the flaws, sometime in future.


DOCUMENTATION The car documents are as important as the car itself. You can take a checklist of all important documents that pertain to your car from the car sales person. Ensure that you have all the documents pertaining to your car.

Receipt of payment to the dealer.
The Owners Manual and Service book.
Car Keys - You get a pair of identical keys.
The Invoice (in original and a duplicate copy)
The Sale Tax & Octroi certificate.
The Registration Certificate - The RC book with an endorsement of lifetime tax paid.
The PUC badge - For new cars PUC certification is valid for one year. (Later, PUC certificate has to be obtained every six months.)
The Delivery Note - The dealer issues a delivery note with the time and date.
The Insurance Certificate
All the above documents are very important and are required to be maintained and produced by the RTO and the Income Tax Authorities. Keeping the documents in place will save you a lot of inconvenience.





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