A good time to buy a car

Unless the model is being phased out or is expected to get a facelift, buying in December makes sense

Potential car buyers can look for a good deal in December, as auto makers come up with irresistible discounts. Companies tell potential customers to make their purchase soon, as prices are likely to be raised early next year.

Chevrolet is offering benefits of up to Rs 1 lakh on Beat, up to Rs 70,500 on Enjoy and Rs 60,000 on Cruze. Other models such as Sail, Spark, and Tavera too have such offers. Maruti has benefits of up to Rs 75,000 on Ritz and Rs 15,000 on Alto K10 and Celerio. Hyundai Motor India, Tata Motors, and Mahindra & Mahindra are also offering such deals. The discounts are better for corporate customers.

So, does it make sense to buy now or defer? It might make sense to defer your purchase if the car you want to buy is about to get a facelift. Yash Gandhi, a Nagpur-based auto dealer, said if you have selected a car that won't be undergoing any major change then it is the best time to buy now. If there's news of a major facelift, it's best to wait for the fresh model.

Maruti Suzuki launched a new model Swift in November. There might not be major changes in the coming months. On the other hand, Hyundai is expected to launch a new Verna by March 2015.

Sometimes, dealers might be willing to pass the current benefits for a car manufactured in the next year by taking a booking amount. Mumbai-based private firm employee Rajesh Bhandari negotiated such an arrangement to buy a car that will have manufacturing date of 2015. "In case the prices go up, I will just need to pay the difference, while I will get all the on-going offers," said Bhandari.

For self-employed, it does make sense to buy now, as they can claim tax benefit on their cars while the cost of acquisition is low.

"Even if you buy a car in the last week of December, you can claim depreciation for 180 days. This works out to be 7.5 per cent this financial year, as a company can claim depreciation of 15 per cent for the full financial year," said Vineet Agarwal, Partner - Tax, KPMG.

Mayur Shah, executive director - Tax & Regulatory practice, Ernst & Young, points out the car needs to be in the name of the company from which the person is earning his or her income. In case of professionals such as doctors and consultants, they can buy the car in their name if they don't have a firm.

While the discounts do translate into huge savings; however financial planners warn that it should not be an impulsive buy only because the benefits are attractive, as it can have serious implications on your finances, especially if you are to take a loan.

Of course, if you are planning to sell the car in the next couple of years, buying now will be a disadvantage. The buyer will consider the car one year older if bought in December. The resale value goes down.