How to not get ripped off by a car dealer?

Car dealerships are the go-to place if you are taking the offline route to buy a new car. However, there are better mediums (online) to buy your new car, like ACKO Drive. If you are purchasing a new car the traditional way, everything is handled by the dealer, right from the booking to the delivery of the vehicle.

Apart from the total price (ex-showroom price) of the new car, a car showroom may also charge you for other things such as handling, registration, car insurance, etc. That’s when you have to be careful and ensure that you are not being overcharged. If you are worried about getting ripped off by a car dealer, this article will help you in that regard.

How to buy a new car without getting tricked by the dealer?

Before answering this question, you need to understand the price breakup of a new car. There are two types of price when it comes to a brand new vehicle. Below are the details of the prices.

• Ex-showroom price: It is the selling price of a new car, excluding the registration charges, road tax and car insurance. The price includes the cost of manufacturing, logistics, taxes and the dealer margin.

• On-road price: It is the price you pay to drive away your brand new car. It is the total sum of the ex-showroom price, vehicle registration charges, road tax, car insurance premium and other additional costs.

You have to be smart while paying the on-road price to the dealer. Pay only for what is essential and mandatory while purchasing a vehicle. The salesperson may include unnecessary accessories or services to bump up the on-road price.

Below are some points that you should keep in mind to ensure that the dealer is not overcharging while buying your dream car.

Check the vehicle manufacturing date

• Before you take the delivery of your car, do check the manufacturing year and month. 

• Sometimes the dealer may try to sell off a car that has been parked in the stockyard for several months.

• The easiest way to find out the manufacturing date is through VIN (Vehicle Identification Number). 

• Typically, you can find the VIN on the car’s windscreen or engraved on the chassis.  

• You can decode the month and year of manufacture through the VIN. If you do not know how to decode, visit the manufacturer's official website, and you should be able to figure it out.

• The reason for checking the manufactured date is you don’t want to buy a car that has been parked for months in the dealer stockyard. 

• Remember, a car is a depreciating asset, and the vehicle's vital components may have depreciated over the period. 

• Even if you buy a 6/8-month-old vehicle, ask the dealer for a discount since the vehicle is a few months old.

Don’t hesitate to ask for discounts

• A dealer may quote a higher price on the services like handling, vehicle registration, etc. They may even elevate the car's worth to keep a healthy profit margin. 

• You can always negotiate with the dealer for a lower quote. Be it the car’s price, additional chargers or accessories, always ask for a competitive price. 

• It’s better if you are aware of discounts such as dealer discount, corporate discount, loyalty bonus, etc., even before you enter the dealership.

Get the quote in writing

• Whenever you settle for a price with the dealer, don’t rely on verbal assurance. Do ask for a printed or written quotation. Note that the quotation is different from the invoice. An invoice is generated after you book the vehicle. 

• With the quotation, a dealer cannot refuse to sell the car upon the agreed price at the time of delivery. 

• Finalise the price of the vehicle, accessories, car insurance premium and other charges and get a proper quote in writing before proceeding with the booking.

Ask for the correct exchange value

• If you exchange your old car at the dealership, do your homework before discussing the exchange value. 

• Find out the market value of your used car by visiting used car portals online. You can even shop around for a similar model in the offline used car market to find the exact market value. 

• Ask the dealer for the correct value of the vehicle. If the dealer is quoting too low for the second-hand car, you can always sell your car elsewhere. So, never agree to a low exchange value for your used car.

Check financing charges

• Purchasing a new car on loan is the easiest way to buy a car if you are running short of funds. 

• However, a dealer may try to profit from it by overcharging on the car loan. Check the loan processing fee, interest rate, tenure, etc., before settling the car finance. 

• Dealers may overprice specific components such as processing fees and increase the interest rate. 

• Hence, it’s better to check if you are eligible for a pre-approved loan from your bank even before approaching a dealer.

Know the booking cancellation charges

• Before you book the vehicle at a dealership, do ask them about the booking cancellation charges. 

• If the dealer cannot deliver the car within the stipulated time, you may have to cancel the booking. For that, the dealer may overcharge you in the name of cancellation charges. 

• So, do ask about such charges beforehand so that you won’t have to lose your booking amount.

Do not buy unnecessary accessories

• While purchasing a new car, the dealer may push you to opt for certain accessories that you may not need. 

• So, be intelligent and wise while choosing accessories. Opt for only those accessories that suit your vehicle and are helpful at the same time.

Do not overpay for car insurance

• If you are opting for dealer-provided car insurance, the chances are the premium may be overpriced. Usually, a dealer earns some amount of profit for selling a car insurance plan. 

• Since the dealer acts as a middleman, you may not get a competitive quote for the insurance plan. Hence, the best option would be to buy insurance online from digital insurers such as ACKO. Legally, a dealer cannot compel you to opt for the insurance policy offered by them.

• You can get a free car insurance quote from ACKO and compare it with the quote you got from the dealer. 

• At ACKO, there are no hidden charges or agent commission, and you can insure your car within a few minutes with zero paperwork.

Check for unnecessary charges

• A dealer specifies all the charges in the invoice. So, go through the invoice carefully and find out if you are being charged for handling, transportation/logistics, processing and other miscellaneous services. 

• As mentioned earlier, the car’s ex-showroom price includes the cost of logistics and dealer margin. So, the car showroom cannot charge you for those services. 

• It’s one of the most common tricks of a car dealer to extract more money from the customer. But as per law, it is illegal to impose such charges on the customer. So, ensure that you pay attention to the invoice before clearing the finances.

In a nutshell

A car dealer acts as a middleman between you and the manufacturer. So, a car dealer may not work in your best interest and may offer biased advice/services to maximise their profits. However, if you know the exact value of the car and the price breakup of a new vehicle, you can avoid getting ripped off by a dealer. 

Alternatively, you can avoid all these hassles altogether by booking your new car online at ACKO Drive. Because ACKO Drive takes care of everything from booking to delivery, and the best part is you get maximum discounts and faster vehicle delivery. All you have to do is visit the website www.ackodrive.com to book your new car.

Frequently asked questions

Here are some of the most commonly asked questions related to buying a new car at the dealership.

Can I buy a new car by paying the ex-showroom price?

Yes, you can pay only the ex-showroom price to the dealer. However, you have to register the car by yourself and have to purchase car insurance. But the dealer may still charge you for the temporary registration number required to drive the vehicle on public roads until you get the permanent registration number.

Can a dealer charge me for transportation of the car from factory to showroom?

No, a car dealer cannot impose transportation or logistic charges on the customer. Such charges are already included in the ex-showroom price of the vehicle.

Do I have to pay for additional car accessories while buying a new car?

Yes, you have to pay for the additional accessories for the new car. However, the car manufacturer/dealer may offer some free accessories with the vehicle. Do check for such accessories while buying the car.