Buying a car? Few things you must keep in mind

Looking to buy a new car? You can exchange your old car for a new model sold by the same company.

Or you can sell your old car through a broker dealing in second-hand cars. Or you can place an advertisement in the newspaper or websites and wait for prospective buyers to get in touch with you.

Which is the best option for you? Most automobile manufacturers announce exchange programmes around the time they are planning a new launch.

Companies have separate teams that work on such exchange programmes.

This is perhaps the most convenient and easy way to upgrade your vehicle.

In this case, manufacturers offer exchange bonus on the new model, which could range anywhere between Rs 10,000 and Rs 60,000 and the dealer will take care of all the paperwork such as registration of the new vehicle, registration of the old vehicle in the new buyer’s name and also help with the loan documents, if you need a loan to buy the new car.

“The bonus will depend on the market demand and pressure on the manufacturer to increase market share for the particular model. If there is a huge competition between automobile companies to increase their market share, they may offer higher discount or bonuses, which will work to the customers’ advantage,” says Nikunj Sanghi, former president, Federation of Automobile Dealer’s Association.

“If you are sure about the car model you want to buy, then exchanging makes sense."

"Otherwise selling through a second-hand car broker will give you flexibility, as you will have more models (from different auto makers) to choose from,” says Nagendra Palle, managing director and CEO, Mahindra First Choice.

But, looking merely at discounts and bonuses might not be the right thing. “Automobile companies may offer higher discounts on models that are not selling very well. Hence, customers must look at the overall cost and not only at the exchange bonus or discount on the new car,” adds Palle.

Sanghi also agrees that a broker might be able to get a higher valuation for your old car.

But you might face problems if the car is not transferred to the new buyer.

So, if the vehicle meets with an accident or gets stolen before the transfer happens, the original owner might be held responsible. You may also have to follow up with the broker for your money.

In case of exchange, the automobile company offers the wholesale price on the old car, which can be 10-12 per cent lesser than the retail price.

“While customers negotiate for discounts on the new car, they tend to forget the value of the old car. But exchanging is faster, as you can sell your old car and buy a new one in just one transaction,” says Kunal Khattar, vice-president, Carnation Auto. You might get an even higher price if you sell your car directly to a customer without a middleman.

Thanks to e-commerce, selling used cars directly is picking up. There are several websites that offer selling old cars. “But it is probably the least convenient. If you have already purchased your new car and have time to talk to buyers and go with them on test drives, then selling directly can fetch you more money,” says Khattar.