Tips to Buy a Car in India 🚗: Complete Guide to Save Money

Buying a car is a big milestone for many of us. But without the right knowledge, you can easily end up paying extra to dealers or banks. Here’s a step-by-step car buying guide that will help you save money and make a smart decision.

1. Don’t Buy Insurance from the Car Dealer

Dealers usually charge way more for insurance. Instead, just ask them for your engine number and chassis number after purchase. With that, you can buy insurance directly from outside (cheaper and better options).

Most dealers push their own insurance policies, which are costlier than outside options. Instead:

• Ask the dealer to give you the engine number and chassis number.

• Use these details to purchase your own insurance from a provider outside of our network.

👉 This alone can save you ₹20,000 – ₹50,000.

2. Avoid Overpriced Dealer Accessories

Avoid buying mats, footrests, roof rails, rain visors, etc., from the dealer. These are overpriced. You’ll find the same things outside at half the price or less.

Dealers charge double or triple for simple things like:

• Floor mats

• Roof rails

• Rain visors

• Footrests

Buy these later from a trusted shop or online at half the price.

3. Take Quotations from Multiple Dealers

Never depend on one dealer and never stick to one dealer. Get price quotes from at least 2-3 dealers, then:

• Negotiate hard.

• Show one dealer’s quotation to another and ask them to beat it.

This way, you’ll always get the best deal.

• Take quotations from at least 2–3 dealers.

• Negotiate for the best price.

• Show one quotation to another dealer and ask them to beat it.

👉 Competition between dealers = savings for you.

4. Ask for Free Accessories

Always ask if they can give you free accessories like mats, covers, or extended warranty. Sometimes they agree if you push a little.

5. Finalize the Right Model and Color

Finalize your favorite color, model, and brand. Sometimes dealers try to push what they have in stock, not what you actually want.

6. Check Manufacturing Month and Year

Always ask for the manufacturing date.
Example: May 2025.

• If the car is old stock (like 6 months old), ask for an extra discount – say ₹25k–₹1.25 lakh depending on price.

• Or insist on a fresh April/May 2025 model.

👉 Example: If the dealer offers you a November 2024 car in May 2025, negotiate hard for a discount.

7. Verify Kilometers Driven

A brand-new car should only have 5–20 km on the odometer.

• If more, ask for a discount.

• Sometimes dealers use cars for test drives before selling.

8. Booking Amount

Book the car with a small amount like ₹21,000. Don’t pay more until things are finalized.

9. Car Loan Tips (Very Important 🚨)

Say your car costs ₹20 lakh (ex-showroom). Here’s a rough cost:

• Ex-showroom: ₹20,00,000

• Insurance: ₹1,00,000

• RTO: ₹1,50,000

• Accessories (if you take): ₹50,000
  On-road Price: ₹23,00,000

👉 Bank usually funds up to 90% of ex-showroom price. You’ll need to pay the rest as down payment.

Important tips for a loan:

• Negotiate interest rate (example: 8.5%).

• Always get a loan sanction letter – it guarantees the interest rate, car model, and processing fees, so the bank cannot change terms later.

10. Loan Disbursement & Delivery Order (DO)

One day before delivery, call the bank person and ask them to release the loan.

• After approval, the bank gives a Delivery Order (DO).

• The dealer receives money in 2–4 hours.

• Banks may charge around 0.85% processing fee – negotiate to bring it down to 0.5–0.6%.

11. Buy Insurance Yourself (Not Dealer’s Plan)

• Now buy insurance on your own (don’t depend on dealer).

  • Take 1st year: full/first-party insurance

  • Next 3 years: third-party insurance

  Example:
  If car’s cost = ₹21,68,999
  After 5% depreciation = ₹20,60,549 → This is your Insured Declared Value (IDV).

  This IDV matters if your car is stolen or a total loss.

12. RTO Registration Process

Give your insurance copy to the dealer so they can register your car with RTO.

• RTO charges are usually around ₹1–1.5 lakh.

• RC (Registration Certificate) will mention Hypothecation to [Bank Name] until you finish all EMIs.

👉 Once you finish your loan, don’t forget to take NOC from the bank and update your RC.

13. Final Car Price Breakup (Example)

Here’s how a final bill may look:

• Ex-showroom: ₹21,68,999

• RTO: ₹1,48,874

• Insurance (self-bought): ₹58,806 (Dealer quote was ₹1,05,000 😲)

• TCS (Tax Collected at Source): ₹21,689 (You get it back during ITR filing)

• Accessories: Nil (Skipped dealer add-ons)

✅ Total savings: ₹50,000 – ₹1,50,000 just by avoiding dealer insurance and accessories.

Final Words: Be a Smart Car Buyer 🚗💡

• Here’s how your final car cost may look:

  • Ex-showroom: ₹21,68,999

  • RTO: ₹1,48,874

  • Insurance (self-bought): ₹58,806 (Dealer quoted: ₹1,05,000 😮)

  • TCS (Tax Collected at Source): ₹21,689 → You can claim it back when filing ITR.

  • Accessories: Nil (we skipped dealer add-ons)

  💡 Final Savings: Buying insurance outside & avoiding dealer accessories can save you ₹50k–₹1.5 lakh easily.

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  ✅ Final Tip: Be patient, negotiate hard, and don’t get emotional during the purchase. A little effort can save you lakhs!

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