[BoothRoyd]

Hello Team-BHPians,

Hope you are all well.

I’m new here and this is my first post. It may be a long one but your answers will really help me, therefore please bear with me and go through my query in detail.

Regarding myself, I’m from Bangalore, a regular reader of the posts, news and reviews on this portal. Wrote to GTO regarding the below query and was advised to get a membership here and ask you guys. So here I am.

Coming to my concern, in 2016 I came across an advertisement in the newspaper regarding Skoda Rapid being available at 0% interest. I called the toll free number and registered as interested and was contacted back by Skoda within 5 minutes. Later that day a sales guy from Tafe Access on St. Marks Road came to my house with a diesel Ambition variant. This was the variant I had requested. He explained the entire process of the financing, the options and the whole gamut. His approach was very methodical and clear and crisp in every way. Apart from this he also offered me freebies like rear parking sensors, leatherette seats etc which were coming up to approximately 45k. I gave him the cheque for 50k immediately as booking amount. That day I was flooded with calls from various people from Tafe thanking me for the booking. I guess I got around 7 or 8 calls from finance guys and showroom manager included. Next day I provided all the documents for finance requirements.

The sales guy came over to my house and collected them. Everything was smooth and crystal clear until I was called to the showroom to sign the loan documents and see the car. The details are as below.

Down payment 50k.
Loan amount 8 lacs for 4 years at 2.xx%.
Remaining cash to be paid 4.5 lacs including registration and insurance etc.
On road price of Skoda Rapid Ambition variant 13 lacs.

As I was about to sign the loan documents I had a gut feel that something was amiss. The math was wrong. I felt I must ask about the breakdown. That’s when things went wrong. I was told that the 8 lacs loan that I was availing was not entirely from VW Finance. Only 7 lacs was from VW Finance and 1 lac would be from Tafe. So the ex showroom price of the vehicle would be undervalued by 1 lac there. Further they were also reducing the price of the freebies that were providing from the ex showroom price of the car. Ex showroom price of the vehicle which was originally 11 lacs was now 9.xx lacs and this was the rate at which they were going to register and insure it at.

My question to them regarding reduction in registration and insurance costs that they were charging me had to then reduce, had no answers. I argued that if the value of the car was 9.xx lacs then insurance and registration with lifetime road tax will also be lesser than a car costing ex showroom 11 lacs. No answers again. Someone said, Sir, it’s market practice. So basically they were taking 13 lacs from me for a car costing 11.xx lacs and pocketing the rest. I refused to sign the loan documents and left the showroom. Hailing from a middle class background this was a special moment for me as it would have been my first car and a good one too but the dishonesty was more than I could handle. I cancelled the booking and asked for a refund of the booking amount. It was returned to me by cash over a period of 3 or 4 months in 3 separate instalments of 20, 20 and 10. I was under the impression that this should have been returned by cheque or demand draft. Anyways I accepted the cash and moved on.

Now, in 2019 I have a young family and need a car and would like to purchase one, preferably a Rapid or Vento because I’m in love with them. Which one would you guys recommend? Also, is it “market practice”? What should I look out for this time around? I understand that my query is long but I would appreciate some help here.

Looking forward to your responses.

Cheers,
BR

Hi Mods,
I searched for similar topics, found many Skoda cheating cases but nothing related to this query. If there is something similar please merge to that thread.
Thanks

[GTO]

Thread moved from the Assembly Line to the Dealerships Section. Thanks for sharing!

[himanshugoswami]

Originally Posted by BoothRoyd

Hello Team-BHPians,
====
Hi Mods,
I searched for similar topics, found many Skoda cheating cases but nothing related to this query. If there is something similar please merge to that thread.
Thanks

I would strongly recommend you away away from VW and Skoda. Their dealers are known to be the worst amongst the lot, and I have personally experienced their service- pathetic would be an understatement.


Whilst the cars are no doubt solid, a car ownership is more than just the vehicle. I would recommend you to look at the Toyota Yaris that has some wonderful deals going (given you are OK with Rapid/Vento, I am assuming you are not bothered by the fact that the car is not a market leader).


If you want something more mainstream, the Hyundai Verna is an excellent package, and comes with peace of mind as well.


Just my 2 cents.

[ninjatalli]

Originally Posted by BoothRoyd

Now, in 2019 I have a young family and need a car and would like to purchase one, preferably a Rapid or Vento because I’m in love with them. Which one would you guys recommend? Also, is it “market practice”? What should I look out for this time around? I understand that my query is long but I would appreciate some help here.

Something I couldn't understand is how a 0% financing scheme turned into a 2.xx% deal for you and you were ok with that.

Anyway, this is a case of a specific dealer playing a game with you on the financing front. A little late, but you should have escalated this to Skoda and VW management since the underlying dishonest financing is leveraging the VW 0% financing deal as the pulling factor.

Vehicle-wise both are exactly the same; so go ahead and give the Vento and Rapid back to back test drives and see if you feel the same. If you get the 0% financing offer again, work out the deal before-hand and make it clear you will escalate any wrong ideas presented. And do not ignore the extended warranty.

However, do remember while the sales team is different from the service team, you will have to be on your guard every time you interact with them. In short, VW & Skoda make great vehicles, but the dealerships are the sour point.

[aargee]

Originally Posted by BoothRoyd

Now, in 2019 I have a young family and need a car and would like to purchase one, preferably a Rapid or Vento because I’m in love with them. Which one would you guys recommend? Also, is it “market practice”? What should I look out for this time around? I understand that my query is long but I would appreciate some help here

There're a long list of issues with VW group posted in TBhp in India. Pls do go through them & consider if you want to own any one of them

Like you, I love every model of VW & Skoda right from the Fabia to Tiguan, they're all very very pleasing & I can simply gaze them all day. But when it comes to owning, no way. It's not about the cost, it's about the attitude of ASC. Despite my Cousin owning a Polo for nearly a decade now & very pleased with service (with occasional complaints of ASC trying to make quick buck by instilling fear to change spares) I'm way too apprehensive when it comes to owning one. But that's me, as I always believe, buying is one time affair, but maintenance is for lifetime

You're from Bangalore aren't you? Think over the low GC of Rapid & Vento on the backbreakers inside the Bangalore city.

Since I don't know what your expectations are, I refrain from suggesting any other brand/model. Personally my choice between Rapid & Vento will be RAPID as its way too awesome; the touch, the experience right behind the steering wheels has not words to express the feeling.

[SoumenD]

Originally Posted by BoothRoyd

...So the ex showroom price of the vehicle would be undervalued by 1 lac there.

This is not new. HONDA did the same for City V MT models around march/april,2019 wherein dealers claimed discounts upto 1.5L. While buying Jazz, I thought if City can get 1.5L, Jazz should ideally get atleast a lakh discount. However I couldn't manage even half of City's discount amount.

So pestered the SA to reveal how exactly City(which sells much more than Jazz) has such hefty discounts? Turned out its the same process of undervaluing the ex-showroom price to 9.99L and eventually saving big on taxes that the said discount was possible. We have another thread on this topic wherein luxury cars are under purview by KA govt. Here (KA cracks down on luxury cars for under-invoicing)

[BoothRoyd]

Originally Posted by himanshugoswami

I would recommend you to look at the Toyota Yaris that has some wonderful deals going (given you are OK with Rapid/Vento, I am assuming you are not bothered by the fact that the car is not a market leader).
If you want something more mainstream, the Hyundai Verna is an excellent package, and comes with peace of mind as well.

Hi himanshugoswami,

I had not given the Yaris a thought. Honestly, I haven't seen one on the road so far. Regarding the Verna, drove one belonging to a friend sometime back and found the brakes to be extremely spongy and the car would wallow like a boat during braking from relative high speeds (120-140kmph). Was not confidence inspiring in my opinion. Feature rich, yes, but scary too. My friend hates the braking too.
Thanks for bringing the Yaris to my attention though. Will definitely check it out.

Hi ninjatalli,

The 0% interest rate which was advertised was applicable for a loan amount of 10 lacs plus and / or for a tenure of less than 18 or 24 months (I cannot recollect exactly). Since I was interested only in the mid variant the rate at 2.xx% was fine with me as the ROI for vehicle loans from a bank would have been significantly higher.

Originally Posted by aargee

You're from Bangalore aren't you? Think over the low GC of Rapid & Vento on the backbreakers inside the Bangalore city.

Hi aargee,

Speed breakers in Bangalore or the mini mountains will be tough to deal with, I agree.
Considering these I've already started considering the C-SUV segment too.

Originally Posted by SoumenD

This is not new. HONDA did the same for City V MT models around march/april,2019 wherein dealers claimed discounts upto 1.5L. While buying Jazz, I thought if City can get 1.5L, Jazz should ideally get atleast a lakh discount. However I couldn't manage even half of City's discount amount.

Hi SoumenD,

ok, so this is "market practice". The question is are Honda passing on the discount to the customer? Skoda wasn't!

[aadil23]

Hey. I am just trying to Add my two cents here as i have previously worked at a Car Dealership.

As per my understanding no bank (read : Bank not NBFC) is allowed to operate below a particular rate as per some RBI guideline. But Auto Companies know that while advertising schemes of 0% or equivalent creates a buzz which leads to higher people enquiring for the vehicle.

Now in order to ensure they run at the advertised Rate they have to reduce the Loan amount in order to match the EMI.

Random Example:
Loan Amount : 10 Lakhs
Actual Bank Rate 9.5% EMI - 20850
Advertised Rate - 2.66% - 17999
In NBFC's dealers can "subvent" the discount to get the above rate. In this example the Discount subvent would be approx 1.47 Lakhs. For Non-NBFC's subvention is not allowed (again RBI guidelines) in which case they would need to change the loan amount from the original 10 Lakhs to 8.52 Lakhs.

Regarding the Invoicing , Registration & Insurance. If there is a discount taken then in order for the invoices to tally (avoiding credit / debit notes) it must be reduced from the Ex-Showroom of the vehicle.

Again for example if you negotiate for a 50k discount the sales person usually thinks its roughly 48k from Ex Showroom + 1k from Insurance + 1k from Registration or any other costs.

Hope this helps rather then adds confusion.

[BoothRoyd]

Originally Posted by aadil23

Hey. I am just trying to Add my two cents here as i have previously worked at a Car Dealership.

Hi aadil23,

Thanks for your reply. While I agree that Banks are governed by the RBI guidelines and NBFCs not so much, I don't think the problem was with the loan.

The problem was with how they were invoicing it and then registering and insuring the car. Going by your explanation, let's ignore the discount and other things, and make it simple.

• Ex showroom price of the car - 10lacs (8 lacs loan + 2 lacs cash)
• Registration - let's say it is 10% of the ex showroom price of the car = 1 lac
• Insurance - let's say 2% of the ex showroom price of the car = 20k
• Total payable by buyer - 10lacs + 1lac + 20k=11,20,000

Going by Skoda's method as I see it

• Ex showroom price of the car - 10lacs (8 lacs loan + 2 lacs cash)
• Story Telling regarding loan (Saaaaaar, only 7 lacs loan from VW Finance, and 1 lac from showroom, Saaaaaar) and undervalue by 1 lac
• New Ex Showroom price of the car - 9 lacs
• Registration - let's say it is 10% of the ex showroom price of the car = 90k
• Insurance - let's say 2% of the ex showroom price of the car = 18k
• Total payable by buyer - 10lacs + 1lac + 20k=11,20,000
• Actual cost of the car - 9lacs + 90k + 18k= 10,08,000
• Difference 1,12,000. Goes straight into the showroom's very large pockets, never to be seen again.

This is the problem. Why should the buyer pay this difference amount?
Shouldn't the buyer benefit?

Thanks
BR

[JayKis]

Originally Posted by BoothRoyd

This is the problem. Why should the buyer pay this difference amount?
Shouldn't the buyer benefit?

Hi BoothRoyd,

Am under the impression that irrespective of the discounts given by the dealer on a particular model, the road tax on the car remains the same. Might want to check that.

[BoothRoyd]

Originally Posted by JayKis

Hi BoothRoyd,

Am under the impression that irrespective of the discounts given by the dealer on a particular model, the road tax on the car remains the same. Might want to check that.

Hi JayKis,

Yup, checked. As mentioned in my original post, they were reducing the ex showroom price of the car with the discounts.

Cheers,
BR

[sgiitk]

Is it that they are undervaluing to pay a lower VAT/road tax. This is the only way you can save on Taxes. Undervalue from the factory.

The tax is payable on the full list/invoice value whichever is higher. So you invoice for a lower value.

[blackwasp]

Originally Posted by BoothRoyd

Coming to my concern, in 2016 I came across an advertisement in the newspaper regarding Skoda Rapid being available at 0% interest.

Technically, there are no 0% interest loans. You will pay the interest component, just that there will be an upfront discount of the same amount from the car maker / dealer. If you read the TnC of such loans, you will realise that there you can't foreclose or even if you do you have to pay the full amount (what you'd pay if you kept the loan as per tenure).

There is no fixed law on the ex-showroom of a vehicle. eg. I got my Abarth at a lower ex-showroom because it was a 2015 model that I picked up in 2016. In your case, the dealer has done clever maths to get you a car for a nice discount. If you feel the insurance ex-showroom is low, increase it in the 2nd year to a value that is comfortable for you. One thing that raises flags is that your payment estimate and the actuals don't match. This should have not been the case. The showroom guys tried to get some extra cash out of your deal ~probably to cover their loss of margin (thanks to the 0% loan).

Originally Posted by BoothRoyd

Hi aadil23,
Difference 1,12,000. Goes straight into the showroom's very large pockets, never to be seen again.

There is some discrepancy done by the dealer as OP should have been charged at actuals. eg. 9.xx ex-showroom + insurance and tax on it and not the list price. This way you pay for only the costs you get the bill for. My guess is dealer was trying to minimise his costs for moving the car.

But BoothRoyd was right in getting away from the deal. Thanks to your alertness you caught the mistake / scam early on. Most of us would have blindly signed the papers without even checking!

That said, such schemes do exist and car dealers do pass on the benefits to the owner, just that this time it didn't happen.