Not just car, get a good deal on auto loan as well, advise experts

Besides discount, look for free warranty, insurance and accessories to lower purchase cost

With the festive season underway, automakers like Maruti Suzuki, Tata Motors, Hyundai Motors, Honda Cars, etc have come out with discounts and a slew of other benefits. Last year’s Diwali discounts were decent but not mouth-watering. Experts say they are marginally better this year.

Three categories of cars are available currently: first, there are those that have a long waiting period; then there are the new launches; and the third category consists of existing models that don’t have a long waiting period.

Ravi Bhatia, president and director, JATO Dynamics, an automotive research firm, says, “Better deals are available on existing models with low or zero waiting period.”

This year discounts on some models have increased from 5 to 10 per cent.

Go beyond discounts
 

Besides discount, also look for exchange offers, free warranty, free accessories, and free insurance.  

Higher discounts are usually available on the less popular options. Hemant Dalvi, auto expert and director, Flashline Multi Products India, says, “Vehicles having metallic colours are costlier than the ones having non-metallic colours.” The cost difference could go up to Rs 20,000.

Buying a model that has a higher resale value will enable you to reduce the cost of your next purchase. Dalvi says, “Generally, vehicles from Maruti, Honda, and Hyundai have a higher resale value. A well-maintained Maruti Dzire, for instance, that is even 10 years old, could have 50 per cent resale value.”

Approach multiple dealerships to bag a better deal. Dalvi says, “Every dealership customises its offerings differently. Remember they can offer discounts over and above what the car companies do.” He suggests negotiating for free insurance or at least three years of free warranty.

Dalvi says you are likely to get a better deal if you sell your existing vehicle in the second-hand market instead of offering it in exchange.  

How to lower loan cost
 

To get a good overall deal, you must get a good deal on the car loan as well. One option is to go for a pre-approved one from the bank with which you have an account. V Swaminathan, executive chairman, Andromeda Loans and Apnapaisa.com, says, “If you go for a pre-approved offer, you are likely to get the loan with less documentation and verification. The interest rate may also be attractive if you have a good credit history.”

The documentation and verification process will be lengthier if you go with a new lender, but you’ll also get more choices. Swaminathan says, “Go for a pre-approved loan if you have less time and may have difficulty in collecting all the required documents. On the other hand, if you have a good credit history and wish to explore all the available options, apply to the reputed lending institutions.”

Compare rates on online portals and apply for the least expensive one that you are likely to be eligible for. Remember that even within the same bank, interest rates vary from one model to another.

To keep your overall loan cost low, opt for a shorter tenor.

While getting a loan at a dealership is fast and convenient, it is also costly.  Adhil Shetty, chief executive officer (CEO), Bankbazar.com, says, “Dealers usually get a commission of around 4.5 per cent on such loans. This will increase your cost. Avoid the loan agents at a dealership unless you are able to negotiate a substantial discount or receive a free accessory.”

Check your credit score before going for a loan. Shetty says, “The credit score has a direct impact on the interest rate. If you don’t have a credit score or it is low, you may have to pay a higher rate.” A good score, on the other hand, gives you greater bargaining power. 
 

If you plan to prepay the loan, avoid those that come with prepayment penalties.