Dealer Holdback: A small percentage of a vehicle’s cost that a manufacturer pays back to a dealership after the vehicle has been sold. This is what allows dealerships to sell vehicles at invoice price or below and still make a profit.
Dealer Incentives: Special offers from car manufacturers to their dealers—which are usually passed on to the customer—to encourage sales in a slow market or when excess inventory builds up.
Dealer Invoice: The amount a manufacturer charges its dealers for a car.
Handling Charges: Charges—usually negotiable—added to the purchase price of a new car to cover the cost of preparing the car for sale after its transport to the dealership.
Destination Charge: The amount charged for transporting new cars from the factory to the dealership. The destination charge on the dealer invoice is not negotiable, but you should never pay any added destination charge tacked on by a dealer, unless you've requested and agreed to such a charge for a vehicle that must be transported a long distance from another dealer.
Documentation Fee: Charges intended to cover the cost of processing the paperwork involved in the sale of a car. Many fees charged by dealers are negotiable.
Rebate: A partial refund on a new-car purchase offered by the manufacturer or dealership in order to increase sales. Rebates can either be deducted from the purchase price or refunded by mail after the sale has been completed.
Ex-Factory Price of Car: It is the price Car Dealer pays to Manufacturer to lift the car from them i.e. it is the price at which a car manufacturer sells the car. Ex-Factory Price Terminology is not so common as it is between the Manufacturer, Dealer.
Ex-Showroom Price of Car: Ex-showroom Price of Car is the price at which a car dealer sells a car to Retail Customers which includes Dealer Margins, Transportation costs and applicable Excise, State Taxes and Octroi Charges. Ex-showroom Price is called the basic price of the asset exclusive of any registration, insurance or loadings.
What is on-road price?
On top of the ex-showroom price, one needs to pay a lifetime road tax, a registration charge, insurance charge that is renewed periodically and logistics charges. In short, on-road price is at which the dealer would hand over the keys of the vehicle to you. Typically, the prices that are added are
Who stands behind the warranty?
Many dealerships offer third-party warranties from companies with Varying track record. If you are going to purchase an extended warranty, make sure it is backed by the automaker, not just the dealership or some other company. You can use a manufacturer-backed extended warranty at any dealership across the country. A third-party warranty might be good only at the dealership that sold it to you.
If you are considering coverage for a specific purpose, such as a road-hazard policy that isn't offered by the automaker, check for online reviews to see what others are saying about it.
Car Extended Warranty
Car Warranty is a Service Contract between Manufacturer and Customer which includes repair or replacement of
causing technical problem in car provided same has not occurred due to any consequential or reasons mentioned as specified by manufacturer.
Extended Warranty acts as Mediclaim Policy to your car. It offers a peace of mind to car owner as cover for failure of any Manufacturing Fault in Car.
Note: There is no difference in between Standard and Extended Warranty of Car. Extended warranty as name suggest is an extension of standard 2-year warranty to 4 or 5 years.
Key benefit: Any Failure of Mechanical or Electrical or Emission System - All Part Replacement and Labor Charges will be borne by Manufacturer.
What is not Covered in Car Warranty
- Driving Car with Engine Oil leakage which can seize the Engine.
- Radiator Damage due to Coolant Leakage.
- Trying to Jump Start Car with Drained Out Battery which can Cause Catalytic Converter to Fail or even.
- Running Car in Deep water which can cause engine seize.
When Warranty Can be Void?
When Scheduled Servicing of Car is not done as per recommended Service Schedule specified.
Any Damage to ECU due to fitment of non-genuine accessories or incorrect fitment from unauthorized centre can damage ECU.
When Repairs done from an Unauthorized Centre or Counterfeit Spare Part Used or Non Genuine Accessories used in Car which can impact Car Wiring.
Attempting to Install any Accessory by Slicing / Modification in Car Electrical Wiring System.
Fitting LPG / CNG even from Manufacturer Authorized Dealer or CNG Authorized Centre Place - unless specifically and cross checked mentioned by Manufacturer that installing CNG from Authorized Dealer will not void warranty and same obtained in written.
Your auto policy may include six coverages. Each coverage is priced separately.
Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Property Damage Liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
Leasing is a smart move of any business to optimise its cost on vehicle procurement and fleet management.
Acquisition Fee: A fee charged by the dealer for initiating a lease; ostensibly covers the costs of processing the lease—credit reports and insurance verification, for example—but is in actuality pure profit. Although many fees associated with a lease are negotiable, this one is generally unavoidable.
Vehicle leasing is the leasing (or the use of) a vehicle for a fixed period of time at an agreed amount of money for the lease. It is commonly offered by dealers as an alternative to vehicle purchase but is widely used by businesses as a method of acquiring (or having the use of) vehicles for business, without the usually needed cash outlay. The key difference in a lease is that after the primary term (usually 2,3 or 4 years) the vehicle has to be returned to the leasing company for disposal.
Lease agreements- Lease agreements typically stipulate an early termination fee and limit the number of miles a lessee can drive (for passenger cars, a common number is 10,000 miles per annum though the amount can be stipulated by the customer and can be 12,000 to 15,000 miles per year). Dealers will typically allow a lessee to negotiate a higher mileage allowance, for a higher lease payment.
Foreclosure Charges- Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower, who has stopped making payments to the lender, by forcing the sale of the asset used as the collateral for the loan.
What are the advantages of Leasing?
Lease Rentals- This refers to the consideration received by the lessor in respect of a transaction and includes:
(i) Interest on the lessor’s investment;
(ii) Charges borne by the lessor. Such as repairs, maintenance, insurance, etc;
(iv) Servicing charges.
Types of Leases:
The different types of leases are discussed below:
A lease agreement gives you the right to use an asset for an agreed period. During the agreed period of the lease you are obliged to make payments for the use of the asset as set out in the lease agreement. At the end of the lease, you can either extend the lease or take ownership of the asset. If you choose to take ownership of the asset, there may be a final payment required depending on the terms of your lease agreement.
This option is best if
What a Lease Agreement offers me:
Leasing provides the use of an item for an agreed period, during which time a rental is paid. At the end of the term, the goods can either be returned, you can acquire ownership or extend the lease.
What this allows me to do:
The following applies primarily if the item is being used for business, or in the generation of income:
Annual Percentage Rate (APR): Also called a finance rate, this is the interest rate on a loan; a percentage of the amount borrowed that a lender charges annually for the use of its money.
Equated Monthly Instalment(EMI): The full form of EMI is Equated Monthly Instalments. It is an amount repaid by a borrower to the lender along with the agreed interest.
EMI = P(r(1+r)n / (1+rs)n-1)
Cost of Funds: An APR, a money factor, or a rent charge, this is the charge for using the bank’s—or another lender’s—money to acquire the car. Also known as financing costs.
Default: Failure to make payments or otherwise abide by the terms of a financing contract.
Down Payment: Cash paid up-front by a borrower to reduce the amount financed in a lease or loan. While a large down payment can reduce your monthly payments.
Early Termination Fees: Penalties paid for withdrawing from a loan ahead of the scheduled end date. Typically, these penalties are very large—akin to simply paying off all remaining payments without the use of the car. These may apply if a vehicle is stolen or totalled and you don't have gap insurance.
Finance Rate: Also called an “annual percentage rate”; the interest rate on a loan. A percentage of the amount borrowed that a lender charges annually for the use of its money.
Gap Insurance: Insurance that covers the difference between a vehicle’s depreciated value in a loan and the amount owed on it in case it is stolen or totalled, a difference the owner or lessee would otherwise have to pay the lessor.
Pre-Computed Interest: A loan in which the total interest is calculated in advance and an equivalent percentage is baked into each monthly payment. If you pay off your principal early, the remainder of these charges should be refunded.
Prepayment Penalties: Charges for paying off a loan early. Because early payment minimizes your total cost of interest, paying off your principal early is usually a good idea. People with good credit and who qualify for good loans shouldn’t have to accept prepayment penalties.
Pre-Qualify: To have a lender confirm you are eligible for a loan without you committing to accepting it.
Principal: The amount borrowed.
Term: The length of a loan usually in years.
Secured Loan- Secured Loan is the loan that is sanctioned by the bank after a security is provided by the customer to get the loan.
Unsecured Loan- Unsecured Loan is the loan that is sanctioned by the bank without providing any security.
Loan Amortisation- Every time you make an EMI payment, you pay down some of the loan (the principal repayment), and also pay for the cost of the loan (the interest cost). This results in a gradual reduction to the principal amount of a loan. This process of paying down the loan is referred to as the process of amortisation.
Repayment Scenario- For most loans, there is a set schedule according to which you repay your loan using the EMI payments. There are three things you should be aware of:
Default- Untimely or irregular payments can bring you in the default category and affect your credit history. On the other hand, failure of payment of a home or car loan can also mean the lender taking over the legal rights for your house or car.
Change in EMI- If you have floating rate loan, your EMI amount is subject to change if interest rates change in the market.
Charges involved for lump-sum payments- If you choose to make a lump-sum prepayment on your loan, you may have to pay a 1 per cent to 3 per cent penalty charge to the lender along with some administrative charges and fees for early repayment.
Guarantor- When you take a loan, you might be asked to have someone as a guarantor to that loan, in case you default on the loan.
Cibil Score- A Credit Score or the CIBIL TransUnion Score is a three-digit numeric summary of your credit history.