Driving Home A Deal

How much would you pay for a Maruti today? Rs 2,27,000. If you remember, it was just Rs 55,000 when it hit the road a decade back. In short, dont wait for a peoples car that fits your budget. Instead, run your eye over consumer finance schemes.

Of course, the rules can come as a dampner. A lot of running around precedes the cheques arrival: income certificates, post-dated cheques, IT-returns and the balance sheet of your firm are just a few things to be put up. In return, down payment and EMIs will become a way of life.

Point is, the old line of resistance no longer works - you pay lots more, resale value will be half of cost-price, etc. Today, a four-wheeler is increasingly becoming a necessity and cushioning its cost are factors such as utility value, depreciation, inflation, etc. Of course, the interest tag and repayment term make borrowing mostly a hard-headed decision taken after some serious accounting.

 

Having opted for the finance route, you have umpteen options. Starting with several banking and non-banking finance companies. But there is a downside as well in this choice of plenty. Selecting a model or financier can be confusing and cumbersome. One way is to check if the manufacturer of a favourite car offers a loan scheme.

Thank to surplus production in the auto industry, at least, three players, Maruti, Premier and Ford, have a way to bankroll you. More players are planning exclusive schemes. Maruti, for one, has tied with Countrywide to finance their vehicle. PAL Credit and Capital and Ford Credit Kotak Mahindra (FCKM) are similar arrangements from Premier and Ford. Ford has set up shop to finance even others vehicles through Kotak Mahindra Primus. Peugeot and Mercedes Benz are also thinking of tying up with another player to offer loans.

Among these three players, PAL does not discriminate between brands - even a Maruti can be financed. In that sense, it is like any NBFCs vanilla plan. However, the other two are exclusively for their own brands. Maruti Countrywide (MC) has already struck a chord with clients whereas FCKM, thanks to its mixed parentage, is yet to carve a niche.

MC offers three options: Earn while you pay, Classic and 100 per cent finance options. With the first, you have to place a security deposit of 25 per cent of the loan amount and get finance for 100 per cent value of the car. You can earn 15 per cent interest on your deposit. The second is a plain finance scheme. Pay 15 per cent and borrow the rest. The term is five years in all the cases.

The final question is: Are the new plans better than the existing ones? Are they cheaper, quicker or easier? A close look reveals that they are not radically different. As new entrants our plan is identical to those of the others. However, as we establish our presence we would add distinct features to it, says Ian McR Gosling, MD, Ford Credit. While MC is offering one per cent off on the rate for your second Maruti.

True, the rates are comparable - mostly, it hovers around 10 per cent flat. But a flat interest rate is scary. On a reducing balance method, 10 per cent flat means 20 per cent effectively. Processing time, too, is similar. But if you are eying the Peugeots and Unos, a long wait is ahead of you. The queues for the Astra are around 30,000 and a whopping 2,88,000 for the Uno versions. Most buyers will have to wait a year for them as for a Peugeot. Mercs may take a month. Delivery of premier models normally take a week or two and stretchable, depending on the pace of production. Likewise, a Sierra or an Estate wont be out faster as Telco is concentrating on Sumo for the present.

In short, you will have time to ruminate between buying a car and driving it.