You have been saving up for almost a year to get the car of your dreams. Buying this car is a huge step in your life and you are excited and thrilled about it. But one must not forget to go through all the details regarding the car before purchasing it.
One such detail that one cannot afford to miss is that of the ex-showroom price and on-road price of a car.
What does the Ex-showroom Price of a Car Mean?
It is the cost of the vehicle, bike, or car, without considering the charges paid for registering it at the RTO, the road taxes paid, and the insurance. This price includes the ex-factory cost, Goods and Services Tax, and the vehicle dealer’s profit margin. It is the price at which the vehicles are usually advertised.
What does the On-road Price of a Car Mean?
It is the cost of the vehicle that one has to pay in order to bring the vehicle from the showroom to the road. It includes the Ex-showroom Price, charges for registration, road tax, and insurance, and any other optional charges.
What are the Basic Differences Between the Two?
|Basis||Ex-showroom Price||On-road Price|
|Meaning||Ex-showroom price is the price of the vehicle before factoring in the cost of vehicle registration, insurance, and road tax.||The on-road price is the price after factoring in the ex-showroom price, cost of vehicle registration, insurance, and road tax. It also includes costs incurred by the car’s accessories.|
|Comparison of price levels||It is less than the On-road Price.||It is higher than the Ex-showroom Price as it contains several additional components.|
|Is it the final purchase price?||No||Yes|
What are the On-road Price Factors?
The On-road Price of a vehicle is dependent on several factors. Some of these are mandatory while some are optional.
- Registration charges are the charges that one must mandatorily pay to the RTO in order to get the vehicle registered and receive the number that will be displayed on the vehicle’s number plate. These charges vary from state to state.
- Road tax is calculated on the ex-showroom price of the vehicle and the range of the same is usually between 3% to 20%. This road tax paid will be valid for a period of 10 to 15 years.
- Tax collected at source is basically the dealership charges of 1% on the ex-showroom price of the vehicle.
- Green cess is the cess that is to be paid by vehicles that are above 2000cc at the rate of 1% on the ex-showroom price.
- Extended warranty is the extension of the manufacturer’s warranty that is either for a specific time or a specific distance travelled by paying an extra sum. This amount is included in the on-road price.
- Annual maintenance package which consists of vehicle cleaning, polishing, servicing, Roadside Assistance, etc. is an optional package, which if opted will increase the on-road price of the vehicle.
- Handling charges is the cost charged for ensuring that the vehicle is transported to a specific location from the factory or the dealer.
- Essential accessories such as seat covers, floor mats, etc are to be bought from the dealer for an extra cost.
- Additional accessories such as an entertainment system or a trendy helmet will demand a price of their own affecting the on-road price of the vehicle.
- Insurance is to be mandatorily purchased as per law with regard to cover for third-party liabilities. Vehicle dealers have tie-ups with insurance providers which makes it convenient to purchase a suitable cover.
How much Effect does Insurance Have on the On-road Price of the Car?
Different types of insurance policies have varying effects on the on-road price of the car.
- If one opts for only a third-party insurance plan, then the on-road price will be lesser.
- If one opts for a comprehensive insurance plan, then the on-road price will be higher.
- If one opts for add-on covers along with a comprehensive car insurance plan, then the on-road price will be higher.
However, do not opt-in for a lower cover in order to reduce the on-road price of the car.
How to Save Money on the On-road Price?
- Do not go for fancy numbers as you can save considerable sums by opting out of such options which have little to add to the overall scheme.
- Think about an extended warranty based on the vehicle’s usage and the time that will be taken in order to cover that distance.
- Cut down on accessories by answering two pertinent questions – are these accessories really necessary? And, is the price demanded for the accessory reasonable and within your budget?
- Check if you need an annual maintenance package as not all cars require extensive servicing due to their minimal usage. This will save on considerable sums.
- Ask for dealer discounts that are exclusively offered to get the best on-road price on the vehicle.
- Look for seasonal offers that dealers have during festivals and other important occasions.
- Insurance must be purchased only after really understanding one’s needs. For example, a passenger cover is of no use if the policyholder uses the car just for himself or herself.
Never hesitate to do some research on the words that are creating some difficulty in understanding as the information that is unearthed will be valuable while you are making decisions. Make sure that you use all the actionable intelligence gathered to maximise your benefits at minimal costs.