Art of Decision Making - anyone to help me??

[menonrajesh]

Hi there..
Me on my first "major" car purchase with a budget of 3.5 - 4.5 L in Bangalore..( Have a '97 M800 bought 1 yr back)..

With extensive help of this forum, I have almost zeroed in Santro XL/XO variants.They are being offered at Trident, Bangalore for 3.94 & 4.22 On-Road, respectively, with additional discount fo 12k worth freebies.Anyone would be able to guide me, if this offer is the best available in bangalore?If not, please provide me the details..

Having said that, I happened to see a column in The Hindu just two days back that Swift is sold with some offers currently.Offer include 12k MAG + 3k Dealer Discount + 15K exchange bonus + 5% of the loan Amount taken. Could we expect anything on top of this, say, free insurance etc? Also does it make sense if we encash the MGA offers and buy the accessories from the market? Anyone on board got idea of the current offers on Swift in Bangalore? Would be greatful if any inputs are provided.

I have to admit that I adore this machine and just because of the price which almost overlapped with a sedan, I decided to hold my instincts and decided to go for Santro.But now, with these current offers, Swift VXi looks much more affordable in its class! CONFUSION!!!

Thanks & Regards
Rajesh Menon

[ghostrider4385]

Hey Rajesh,
Mind if I add to your confusion? Did you consider the new Indica Xeta while making your choice? According to many it is good Value For Money (VFM), and also falls in your budget! The ad too says, you gotta be dumb if you don't consider the car!

And talking about freebies... NO! you don't have the option of getting the hot leggie babes along with the car! Lol...

Godspeed.

Alok.

[mnemonic]

That is the best deal on the Swift Ive come across. The dealers in Delhi and Gurgaon arent even bothered to mention the D word when it comes to the Swift. So i would suggest that you lap it up if your heart points to the Swift. And moreover, the Swift is way ahead from the Santro League.

cheers

[speedbuster]

Originally Posted by menonrajesh

5% of the loan Amount taken

there is no such discount like this, infact its a part of looting process by the dealer.

Suppose u went to some bank to claim car loan, they quote you EMI of 7000/- for 5yrs.

But if u take loan of same amount through car dealers, they increase the EMI by small amount, say 400/-, so they quote you 7400/- as EMI for 5yrs.
and they will tempt you by saying 5% on loan amount, which comes to about say 15000/-
but u r paying 400/- extra every month, so 400 x 60(months)= 24000/-

so u end up paying 24000 extra by seeing a discount of 15000/-


Beware: ** never apply for loan through car dealers, apply for loan directly through bank**

[menonrajesh]

Originally Posted by speedbuster

there is no such discount like this, infact its a part of looting process by the dealer.

Beware: ** never apply for loan through car dealers, apply for loan directly through bank**

Thanks for this!
Rgds
Menon

[goldie_malhotra]

Originally Posted by speedbuster

there is no such discount like this, infact its a part of looting process by the dealer.

Suppose u went to some bank to claim car loan, they quote you EMI of 7000/- for 5yrs.

But if u take loan of same amount through car dealers, they increase the EMI by small amount, say 400/-, so they quote you 7400/- as EMI for 5yrs.
and they will tempt you by saying 5% on loan amount, which comes to about say 15000/-
but u r paying 400/- extra every month, so 400 x 60(months)= 24000/-

so u end up paying 24000 extra by seeing a discount of 15000/-


Beware: ** never apply for loan through car dealers, apply for loan directly through bank**

not exactly - i had the same offer on my car, whose ex-showroom was 7.99L, loan was 90% for 5 years

1. either go via dealer, and get 5% discount on loan amount of 7.14L, around 36K - and get loan @ 9.5% reducing

2. or, go via the bank, and get no discount, but interest rate is 7% reducing

the difference between the EMI's was 900/- which works out to around 54000/- in the long run

but - the difference is that - in first case, i get the money, 36k NOW, and can invest it, so that returns over a period of 5 years, an amount which could be equal to the difference in the EMIs

now, it is debatable if i would have invested that amount wisely enough (most likely, blown it on accessories ) to get myself that high a return - so i chose the second option.

bottomline is - take finance discount only if you can put it to a very good use right now, else go for lower EMI

edit - i got this advice from the car loans manager in citibank - who happens to be a close pal

[menonrajesh]

Originally Posted by goldie_malhotra

not exactly - i had the same offer on my car, whose ex-showroom was 7.99L, loan was 90% for 5 years

1. either go via dealer, and get 5% discount on loan amount of 7.14L, around 36K - and get loan @ 9.5% reducing

2. or, go via the bank, and get no discount, but interest rate is 7% reducing

the difference between the EMI's was 900/- which works out to around 54000/- in the long run

but - the difference is that - in first case, i get the money, 36k NOW, and can invest it, so that returns over a period of 5 years, an amount which could be equal to the difference in the EMIs

now, it is debatable if i would have invested that amount wisely enough (most likely, blown it on accessories ) to get myself that high a return - so i chose the second option.

bottomline is - take finance discount only if you can put it to a very good use right now, else go for lower EMI

edit - i got this advice from the car loans manager in citibank - who happens to be a close pal

Thanks for this piece of information.
I am in touch with SBI for the car loan and they are offering the loan at 8.25% diminishing for 5 year tenure. I am sure, any bank would be giving the car loan for new cars in this range only, now a days..That being the case, a finance discount of 5% on a loan for Rs 4,00,000 @ 9.5% interest rate, which is Rs 20,000/-, is always better option than going ahead with a loan @ 8.25% interest from SBI, with no finance discounts. The difference in EMI, between the options being a small amount would not hit the consumer much, every month and he surely can bear the fruit of the offer in the initial stage, instead of speading it across the entire loan tenture of 5 years.Infact, opting for finance discount will fetch us more money than the second option.

I would request the forum to look into the above and ascertain if the approach is in the right direction or not.

Thanks & Regards
Rajesh Menon

[goldie_malhotra]

Originally Posted by menonrajesh

Thanks for this piece of information.
I am in touch with SBI for the car loan and they are offering the loan at 8.25% diminishing for 5 year tenure. I am sure, any bank would be giving the car loan for new cars in this range only, now a days..That being the case, a finance discount of 5% on a loan for Rs 4,00,000 @ 9.5% interest rate, which is Rs 20,000/-, is always better option than going ahead with a loan @ 8.25% interest from SBI, with no finance discounts. The difference in EMI, between the options being a small amount would not hit the consumer much, every month and he surely can bear the fruit of the offer in the initial stage, instead of speading it across the entire loan tenture of 5 years.Infact, opting for finance discount will fetch us more money than the second option.

I would request the forum to look into the above and ascertain if the approach is in the right direction or not.

Thanks & Regards
Rajesh Menon

In your case, I would suggest you go for the discount and spend it on accessories or other stuff.

But, I think SBI offers loans as per on-road prices. So, that might be useful if you are strapped for cash.

[menonrajesh]

Originally Posted by menonrajesh

I happened to see a column in The Hindu just two days back that Swift is sold with some offers currently.Offer include 12k MAG + 3k Dealer Discount + 15K exchange bonus + 5% of the loan Amount taken.

Hi frnds..
Re: offer on Swift, I have checked with RNS and Sagar Automobiles in Bangalore and they seem (or act?) to be unaware of these. However, both the showroom guys agreed that this offer could be launched in April, since they are expecting comparatively less sales in the starting of new financial year. Still, they are not indicating anything solid! If this is an actual one, Vxi w/o ABS will effectively cost 4.38 (OTR price is 4.88 in Bangalore)!!! I have decided to wait for one more week and see!!Will post any info. I get on this..
Cheers
Rajesh Menon

[devarshi84]

Originally Posted by menonrajesh

Hi frnds..
Re: offer on Swift, I have checked with RNS and Sagar Automobiles in Bangalore and they seem (or act?) to be unaware of these. However, both the showroom guys agreed that this offer could be launched in April, since they are expecting comparatively less sales in the starting of new financial year. Still, they are not indicating anything solid! If this is an actual one, Vxi w/o ABS will effectively cost 4.38 (OTR price is 4.88 in Bangalore)!!! I have decided to wait for one more week and see!!Will post any info. I get on this..
Cheers
Rajesh Menon

If you want ultimate manna in your budget then try to look at the palio 1.6 sports. The most powerful hot hatch in Indian History with space,build,safety,comfort thrown in. small niggles here and there along with an average FE of 8-10 for a 1.6 can be considered as drawbacks.

If you are looking at a no trouble new car then look at the suzuki swift. Go for the fully loaded model if you can. Auto a/c, abs, airbags and other extras are worth.

If you want an absolutely VFM car with lots of space,safety and comfort with a good FE thrown in then look at the xeta. Also when at tata motors showroom have take a test drive in the palio 1.2nv.

Depends on what you want from the car.

[Floyd de Souza]

Rajesh,

I suggest you use a simple decision making tool called KT (short for Kepner Tregoe ) method. In fact they used to teach this in engg and MBA courses. It is simple yet effective. Let me explain...You list down your needs (those attributes which you absolutely must have) and your wants (those attributes which are not absolutely necessary but they are desirable). For example safety could be a need while climate control could be a want. Once you have fixed your budget, make a table with your needs and wants list on the left and the choices (within your budget on the right). For each choice tick against that need or want that is satisfied by that choice. Once you have done that then the choice with the max no. of ticks against needs should automatically be your selection. If there is a tie then the choice with the max no. of ticks against wants would be your selection. even after that if there is a tie then you can decide with your heart or make your list of needs and wants more comprehensive and go through the above procedure once again. This way you will definitely arrive at a decision and the probability of confusion is very very low. I hope I have been of some help.

[abhi182]

Simple,
use the PMT function on MS excel to choose between finance options
(=PMT(Rate, period, PV))

Rate = Annual diminishing rate on a monthly basis, e.g. say 7% annual reducing = [{(1+0.07) ^ (1/12)}-1]= 0.565%
You can also simply divide 0.07 (7%) by 12 to get a close approximation

Period=no of monthly instalment which is 60 for 5 years (12 X 5)

PV- Present Value = Amount of loan taken
For comparisons sake, let us use a EMI per 100,000 for calculations

For 0 rebate, 7% interest, rate= 0.565%=0.00565 per month
EMI per lac = PMT(0.00565, 60, 100000)= -1969.76 per month per lakh

For 5% rebate, 9.5% intereset, rate =0.76%=0.0076 per month
Your net PV in this case = 95000 for every lakh you avail
so EMI per lakh= PMT (0.0076, 60, 95000)= -1977.58

Thus in this case, the 7% loan is better for you...
Take quotes and compare similarly

[goldie_malhotra]

Originally Posted by abhi182

Simple,
use the PMT function on MS excel to choose between finance options
(=PMT(Rate, period, PV))

Rate = Annual diminishing rate on a monthly basis, e.g. say 7% annual reducing = [{(1+0.07) ^ (1/12)}-1]= 0.565%
You can also simply divide 0.07 (7%) by 12 to get a close approximation

Period=no of monthly instalment which is 60 for 5 years (12 X 5)

PV- Present Value = Amount of loan taken
For comparisons sake, let us use a EMI per 100,000 for calculations

For 0 rebate, 7% interest, rate= 0.565%=0.00565 per month
EMI per lac = PMT(0.00565, 60, 100000)= -1969.76 per month per lakh

For 5% rebate, 9.5% intereset, rate =0.76%=0.0076 per month
Your net PV in this case = 95000 for every lakh you avail
so EMI per lakh= PMT (0.0076, 60, 95000)= -1977.58

Thus in this case, the 7% loan is better for you...
Take quotes and compare similarly

Thats neat - but the assumption here is that one may not be able to earn interest at a rate of more than 9.5% p.a on the 5% of the loan amount got as rebate.