Planning to buy a car? You can get heavy discounts, amazing deals in Dec

If you are planning to sell the vehicle in four-five years, a number of factors such as age and, as a result, pricing come into play

December, like the festive season of Diwali, is also a time of discounts and amazing deals, especially when it comes to cars. It is the time when companies offer big discounts. Hemant Dalvi, managing director, Genistra Cars Bazzar, says: “You get as much as 10-15 per cent discount during this time of the year. It’s pretty much like stock clearance as the dealers like to sell cars manufactured during the year.”
 

But there is a catch. When you buy a car in December, it gets registered in December. For instance, the car registered this year will have a registration date of December 2018. 
 

Now you would wonder why that is such a bad deal. Balwant Jain, chartered accountant and a certified financial planner, says: “A car registered in December 2018 vis-a-vis a car registered next year in January might be just a few days apart from each other. But the date of registration has a substantial impact on the resale value of the car.” 
 

The resale value is the amount at which the car is expected to sell at some point in the future. And, among other parameters like the number of miles driven, image, spare part availability, maintenance and after-sales service, the registration date is the most important parameter. Dalvi says: “When it comes to reselling a car, December registration will add one year to the age of the car even if it’s just one month away from the new year.” This means a car bought on December 25, 2013, will be five years today, as compared to a car bought on January 1, 2014, which will be four years old. And a single year can dig a big hole in your pocket in some ways. 

Say, you are buying your car in December for Rs 500,000. When you sell after six years, you will get around Rs 190,000 less, which means the resale value would be Rs 310,000. But, if you wait till January and buy the car for Rs 525,000, the resale value after five years — about 30 per cent, or about Rs 158,000, less — will be about Rs 367,000. 
 

These numbers are based on the assumption that the car bought during this month loses more value simply due to the month.

Remember, you might get a discount deal and pay a lower price when you buy a car in December since an additional year is added. 
 

And, buying in January will give you a better resale value. Dalvi says: “At times when you sell the car to an individual, he may not add an additional year for a December registration car, but when it comes to car dealers, they will definitely take into account the additional year and depreciate the car value further to get a better deal for themselves.”
 

However, if it is a car that will be used for a long time, this does not matter. 
 

As Dalvi puts it: “If you are looking to buy a car and use for a long time, say, 8-10 years, it’s better to take the December discount. But if you plan to change the car in three to four years, it’s better to buy in January as resale value comes into play.” 

So go ahead, and put on your thinking hats, find out how long you want to use the car and make the most of the year-end deals.