Dealer asking for full payment for vehicle in transit

webofunni · 22nd July 2022, 09:37

Hi,

Want advice from experienced BHPians. I've booked a 5th gen honda city top model which costs around 18lakhs on road. The dealer provided a sales agreement when I booked the car and as per that the vehicle will be delivered in 45 days. Its been more than 30 days and as per them, the vehicle is in transit. Yesterday sales executive called me and asked to pay the full amount so that they can allocate the vehicle, otherwise, there are other bookings in the dealer network and the vehicle might go to them.

My loan which is around 40% of vehicle value is also sanctioned and I am worried I have to pay a considerable amount in fees if I cancel the vehicle booking and thus the loan sanctioned.

As far as I understood it is not a norm to pay the full amount in advance for a vehicle in transit. Is there anybody who faced the same situation?

Jaggu · 22nd July 2022, 12:17

Yes this is normal, once vehicle is dispatched based on your booking dealer can ask for a payment. Only thing if you plan to do a pre delivery inspection, don't let them register before you do that.

speedmiester · 22nd July 2022, 12:29

Quote:

Originally Posted by webofunni

Hi,

Want advice from experienced BHPians. I've booked a 5th gen honda city top model which costs around 18lakhs on road. The dealer provided a sales agreement when I booked the car and as per that the vehicle will be delivered in 45 days. Its been more than 30 days and as per them, the vehicle is in transit. Yesterday sales executive called me and asked to pay the full amount so that they can allocate the vehicle, otherwise, there are other bookings in the dealer network and the vehicle might go to them.

My loan which is around 40% of vehicle value is also sanctioned and I am worried I have to pay a considerable amount in fees if I cancel the vehicle booking and thus the loan sanctioned.

As far as I understood it is not a norm to pay the full amount in advance for a vehicle in transit. Is there anybody who faced the same situation?

Unfortunately this has become the norm as it is a seller's market out there. Earlier dealers used to use credit in getting the cars, now since there is huge demand and waiting period, they are trying to cash in on the frenzy by asking customers to pay for the cars in transit rather than take credit at high interest rate.

No harm in paying for the car as long as the dealer is ready to allow for an inspection before registration formalities.

webofunni · 23rd July 2022, 01:38

Quote:

Originally Posted by speedmiester

Earlier dealers used to use credit in getting the cars, now since there is huge demand and waiting period, they are trying to cash in on the frenzy by asking customers to pay for the cars in transit rather than take credit at high interest rate.

Thanks. Out of curiosity, what do you mean by credit? Does the dealer have to pay the manufacturer for shipping the vehicle to their showroom?

colcol · 23rd July 2022, 08:05

No, as much as the dealer might try to convince you otherwise, this is not the norm. You should make the full payment only after having conducted a satisfactory PDI. How the dealer's working capital is arranged is between them, the OEM and their bankers and not the customer's responsibility. At the most, you can agree to pay a token amount ( say 1 lakh) over and above the booking amount to get the vehicle "allotted" to you. Once you have made the full payment, there is nothing preventing the dealer from registering the vehicle in your name before the PDI and, in the event that the vehicle is not to your satisfaction, getting a refund will be a nightmare.

itsmeparvathy9 · 23rd July 2022, 08:20

What I have found is that this is the case with most dealerships, and they do ask full payment once the vehicle is allotted and ready. You may should get a PDI before registration though.

sreerknair · 23rd July 2022, 08:53

I had purchased a City from Vision Honda, Palarivattom, 10 months back and I paid the full amount only after PDI. Neither the dealer insisted for a full payment before that. If everything goes well then paying in advance is okay, but if you find any issues during PDI then rejecting the car and asking for a new one will be a challenge depending on how the dealer will react and the fact that you started paying EMI on the loan amount. Try negotiating with the dealer and agree on some token amount of say 1L or so as advance.

androdev · 23rd July 2022, 09:08

Everything depends on supply vs demand. Dealer can always ask for advance payment if there are other customers eager to pay full advance. Makes good business sense for the dealer. If you put yourselves in the shoes of a dealer, you would also do everything possible to improve your working capital.

Hasn't the dealer told you about terms of payment at the time of booking? IMHO, you should have got the payment terms in writing at the time of booking to avoid surprises like this.

You can agree to pay in full if you can get the dealer to give you assurance in writing/email that you have to the right to ask for a fresh allotment if the car doesn't pass PDI to your satisfaction.

In general, it's the responsibility of the buyer to get all important T&C in writing before parting with money.

rishi.roger · 23rd July 2022, 09:12

No. Don't pay the full money before PDI. If we all start succumbing to dealership pressure, the market will eventually become like that.
You can pay majority of amount once vehicle is in transit (make sure dealer gives you this in writing about VIN number and a tentative ETA for PDI).
Keep the remaining 10-20 percent amount pending as you can hold the other end of line in case anything goes south. If you make full payment, you'll loosen your leverage on the dealership.
They generally ask for full payment as they want to start the invoicing process and also settle their monthly sales goals.

Plus, once you have paid a certain chunk of money to the dealership which is considerably much higher than booking amount - its a very clear intent from your side that you indeed want a car.
Its a foul practice from dealership saying that we will allocate car to other individual if you don't make full payment. Don't settle for that. We all understand that it's a dealership market but it doesn't mean we should give them the leverage to hold us by our throat and cough out money whenever they demand. There's a process and they should be made to adhere. You're the one who's paying the money.

Latheesh · 23rd July 2022, 09:19

I paid full amount (except accessory charges) after inspecting the car (before signing registration application papers).

Accessory amount was paid on the delivery day after doing PDI.

itsmeparvathy9 · 23rd July 2022, 09:53

Quote:

Originally Posted by androdev

Everything depends on supply vs demand. Dealer can always ask for advance payment if there are other customers eager to pay full advance. Makes good business sense for the dealer. If you put yourselves in the shoes of a dealer, you would also do everything possible to improve your working capital.

This is exactly the case with most high in demand cars these days where waiting periods are high. Dealerships of KIA, Hyundai etc. have so many bookings of the same vehicle and model that they here are many customers eager to pay full advance to get the car at the earliest, so dealers are able to demand the same from you as well.
However, if it is the model allocated to you based on your booking priority, they will wait a few days and ensure your demands are met as regards the vehicle (reasonable demands).
However, if the vehicle is one allotted based on a cancellation of booking of a customer and there are other customers willing to purchase the same vehicle by paying full amount in advance, the dealer will not wait and move on.

I am not in favour of this trend, nor do I want anybody to be succumbing to dealer pressure, but it's a sellers' market today and vehicles do command long waiting periods.

ghodlur · 23rd July 2022, 09:58

Quote:

Originally Posted by webofunni

Yesterday sales executive called me and asked to pay the full amount so that they can allocate the vehicle, otherwise, there are other bookings in the dealer network and the vehicle might go to them.

My loan which is around 40% of vehicle value is also sanctioned and I am worried I have to pay a considerable amount in fees if I cancel the vehicle booking and thus the loan sanctioned.

As far as I understood it is not a norm to pay the full amount in advance for a vehicle in transit. Is there anybody who faced the same situation?

Generally the full payment is to be done after the stockyard PDI and confirmation from yourself before it goes for registration. In your case the dealer is simply arm twisting you. I would suggest to get in writing from dealer regarding the pre-registration inspection and return of money within stipulated time period in case you dont want to go ahead with the car.

Earlier days there used to be a suspense account where the amount would be lying till the owner gives a confirmation to dealer to use the same, don't know if that exists in these digital days.

fhdowntheline · 23rd July 2022, 09:59

While it is very important to do PDI, lets not assume that every vehicle may be bad unless it feels visually OK, from a financial commitment perspective. I have had my share of PDI woes which I highlighted in other parts of the forum, but there is no rule that says that once you have made the payment, you must take its delivery even if it is in bad condition. You can always defer delivery- the dealer cannot force you to accept a defective vehicle at the point of delivery. Another issue is that we have the odd cases of cars becoming lemons post delivery, so if you are in the wrong band of the statistical curve, you can expect anything to happen.
A better option is that you make a wise choice of the car, if that model is in demand, make sure you have the finances ready and can pay up to get better delivery commitment and then take a satisfactory PDI and delivery. Its more hassle-free in my opinion.

thanixravindran · 23rd July 2022, 13:35

Your first preference is not to pay unless you see the vehicle. In case you are afraid that your allocation will be changed if you don't pay, there are chances it still can be changed and sold to someone for a single rupee more even after getting the payment from you. Indian businesses are notorious on ethics front.

In case you want to pay now due to the fear of missing out on allocation, please get the VIN number first through email and decode it. If the dealer is telling the vehicle is in transit, it means he is allocated of the VIN number. Verify it during PDI in person as well against Form 21 which accompanies the vehicle from manufacturer. This should reduce your chance of any foul play.

clevermax · 23rd July 2022, 13:38

I never paid in full until my car had been brought, and the temp registration process was complete after I personally did a PDI on the new car which was kept in the yard. The dealer tried their best in terms of persuasion but I never budged.

You should deny full payment until you see the car in person and do a PDI in their presence.

22nd July 2022, 09:37	#1
webofunni Newbie Join Date: Nov 2019 Location: Kochi Posts: 8 Thanked: 10 Times	Dealer asking for full payment for vehicle in transit Hi, Want advice from experienced BHPians. I've booked a 5th gen honda city top model which costs around 18lakhs on road. The dealer provided a sales agreement when I booked the car and as per that the vehicle will be delivered in 45 days. Its been more than 30 days and as per them, the vehicle is in transit. Yesterday sales executive called me and asked to pay the full amount so that they can allocate the vehicle, otherwise, there are other bookings in the dealer network and the vehicle might go to them. My loan which is around 40% of vehicle value is also sanctioned and I am worried I have to pay a considerable amount in fees if I cancel the vehicle booking and thus the loan sanctioned. As far as I understood it is not a norm to pay the full amount in advance for a vehicle in transit. Is there anybody who faced the same situation?
	(3) Thanks

22nd July 2022, 12:17	#2
Jaggu Team-BHP Support Join Date: May 2004 Location: Bangalore Posts: 20,215 Thanked: 15,907 Times	Re: Dealer asking for full payment for vehicle in transit Yes this is normal, once vehicle is dispatched based on your booking dealer can ask for a payment. Only thing if you plan to do a pre delivery inspection, don't let them register before you do that.
	(8) Thanks

23rd July 2022, 08:05	#5
colcol Newbie Join Date: Dec 2021 Location: Noida Posts: 17 Thanked: 28 Times	Re: Dealer asking for full payment for vehicle in transit No, as much as the dealer might try to convince you otherwise, this is not the norm. You should make the full payment only after having conducted a satisfactory PDI. How the dealer's working capital is arranged is between them, the OEM and their bankers and not the customer's responsibility. At the most, you can agree to pay a token amount ( say 1 lakh) over and above the booking amount to get the vehicle "allotted" to you. Once you have made the full payment, there is nothing preventing the dealer from registering the vehicle in your name before the PDI and, in the event that the vehicle is not to your satisfaction, getting a refund will be a nightmare.
	(11) Thanks

23rd July 2022, 08:20	#6
itsmeparvathy9 BANNED Join Date: Jul 2022 Location: Thrissur/Kochi Posts: 260 Thanked: 333 Times	Re: Dealer asking for full payment for vehicle in transit What I have found is that this is the case with most dealerships, and they do ask full payment once the vehicle is allotted and ready. You may should get a PDI before registration though.
	(2) Thanks

23rd July 2022, 08:53	#7
sreerknair BHPian Join Date: Jun 2010 Location: KL 04 Posts: 251 Thanked: 1,318 Times	Re: Dealer asking for full payment for vehicle in transit I had purchased a City from Vision Honda, Palarivattom, 10 months back and I paid the full amount only after PDI. Neither the dealer insisted for a full payment before that. If everything goes well then paying in advance is okay, but if you find any issues during PDI then rejecting the car and asking for a new one will be a challenge depending on how the dealer will react and the fact that you started paying EMI on the loan amount. Try negotiating with the dealer and agree on some token amount of say 1L or so as advance.
	(8) Thanks

23rd July 2022, 09:08	#8
androdev Distinguished - BHPian Join Date: May 2007 Location: bangalore Posts: 3,096 Thanked: 22,337 Times	Re: Dealer asking for full payment for vehicle in transit Everything depends on supply vs demand. Dealer can always ask for advance payment if there are other customers eager to pay full advance. Makes good business sense for the dealer. If you put yourselves in the shoes of a dealer, you would also do everything possible to improve your working capital. Hasn't the dealer told you about terms of payment at the time of booking? IMHO, you should have got the payment terms in writing at the time of booking to avoid surprises like this. You can agree to pay in full if you can get the dealer to give you assurance in writing/email that you have to the right to ask for a fresh allotment if the car doesn't pass PDI to your satisfaction. In general, it's the responsibility of the buyer to get all important T&C in writing before parting with money.
	(3) Thanks

23rd July 2022, 09:12	#9
rishi.roger BHPian Join Date: Jun 2022 Location: WEST DELHI Posts: 194 Thanked: 452 Times	Re: Dealer asking for full payment for vehicle in transit No. Don't pay the full money before PDI. If we all start succumbing to dealership pressure, the market will eventually become like that. You can pay majority of amount once vehicle is in transit (make sure dealer gives you this in writing about VIN number and a tentative ETA for PDI). Keep the remaining 10-20 percent amount pending as you can hold the other end of line in case anything goes south. If you make full payment, you'll loosen your leverage on the dealership. They generally ask for full payment as they want to start the invoicing process and also settle their monthly sales goals. Plus, once you have paid a certain chunk of money to the dealership which is considerably much higher than booking amount - its a very clear intent from your side that you indeed want a car. Its a foul practice from dealership saying that we will allocate car to other individual if you don't make full payment. Don't settle for that. We all understand that it's a dealership market but it doesn't mean we should give them the leverage to hold us by our throat and cough out money whenever they demand. There's a process and they should be made to adhere. You're the one who's paying the money. Last edited by rishi.roger : 23rd July 2022 at 09:17.
	(15) Thanks

23rd July 2022, 09:19	#10
Latheesh Senior - BHPian Join Date: Dec 2007 Location: CNN/BLR Posts: 4,243 Thanked: 10,090 Times	Re: Dealer asking for full payment for vehicle in transit I paid full amount (except accessory charges) after inspecting the car (before signing registration application papers). Accessory amount was paid on the delivery day after doing PDI. Last edited by Latheesh : 23rd July 2022 at 09:20.
	(2) Thanks

23rd July 2022, 09:59	#13
fhdowntheline Senior - BHPian Join Date: Sep 2019 Location: Pune Posts: 2,486 Thanked: 7,461 Times	Re: Dealer asking for full payment for vehicle in transit While it is very important to do PDI, lets not assume that every vehicle may be bad unless it feels visually OK, from a financial commitment perspective. I have had my share of PDI woes which I highlighted in other parts of the forum, but there is no rule that says that once you have made the payment, you must take its delivery even if it is in bad condition. You can always defer delivery- the dealer cannot force you to accept a defective vehicle at the point of delivery. Another issue is that we have the odd cases of cars becoming lemons post delivery, so if you are in the wrong band of the statistical curve, you can expect anything to happen. A better option is that you make a wise choice of the car, if that model is in demand, make sure you have the finances ready and can pay up to get better delivery commitment and then take a satisfactory PDI and delivery. Its more hassle-free in my opinion.
	(2) Thanks

23rd July 2022, 13:35	#14
thanixravindran BHPian Join Date: Feb 2022 Location: Chennai Posts: 562 Thanked: 2,753 Times	Re: Dealer asking for full payment for vehicle in transit Your first preference is not to pay unless you see the vehicle. In case you are afraid that your allocation will be changed if you don't pay, there are chances it still can be changed and sold to someone for a single rupee more even after getting the payment from you. Indian businesses are notorious on ethics front. In case you want to pay now due to the fear of missing out on allocation, please get the VIN number first through email and decode it. If the dealer is telling the vehicle is in transit, it means he is allocated of the VIN number. Verify it during PDI in person as well against Form 21 which accompanies the vehicle from manufacturer. This should reduce your chance of any foul play.
	(7) Thanks

23rd July 2022, 13:38	#15
clevermax Senior - BHPian Join Date: Jun 2006 Location: Tvm/Amsterdam Posts: 2,086 Thanked: 2,640 Times View My Garage	Re: Dealer asking for full payment for vehicle in transit I never paid in full until my car had been brought, and the temp registration process was complete after I personally did a PDI on the new car which was kept in the yard. The dealer tried their best in terms of persuasion but I never budged. You should deny full payment until you see the car in person and do a PDI in their presence.
	(2) Thanks