If there is one thing that makes life’s daily grind totally worth it, it is undoubtedly the rewards it yields. And, we invest those rewards in many ways, by spending some quality time with our loved ones with a relaxing and rejuvenating vacation, or by ticking off some of the things in our bucket lists. For most people, their bucket list consists of a list of things they would like to do before they hit a certain age. It could be the simplest of things like traveling solo or to bigger accomplishments like owning a vehicle or a home. Ticking off the items on the bucket list is not just a harvest of our rewards, but also marks some of the most important milestones of our life.
And, one such item that will be a part of most Indian’s bucket list is owning a car or a bike. It might seem silly to spend so much of earnings on a depreciating asset, but this one is just not about the money. It is more of an emotional investment than a monetary one. You can see more emotions in a car showroom than railway stations and airports combined together.
For some people, this decision is taken at the spur of the moment, whereas for most, this requires a very strict budget and meticulous planning to arrange the necessary funds. In terms of funds, banks prove to be our guardian angels in helping us realise our dreams. So, it is important as a buyer to know and understand the overall financial expenses that come along with the purchase of a vehicle. But, there is one detail that most people often overlook, which is the difference between a vehicle’s Ex-showroom price and the On-road Price.
In this article, we will explore the meaning and difference between the terms: Ex-showroom Price and On-road Price. The article will also shed light on the different components that are taken into consideration to determine the price of a vehicle in India.
Difference Between a Vehicle’s Ex-Showroom Price and On-Road Price
What is Ex-showroom Price?
The Ex-showroom price of a vehicle is the basic price of the vehicle without considering the charges paid for the registration of the vehicle at the Regional Transport Office (RTO), the road tax, and appropriate vehicle insurance. In simpler terms, this is the price for which the dealer procures the vehicle from the original manufacturers. Generally, the ex-showroom price of a vehicle includes the ex-factory cost, goods, and services tax, and the profit margin of the vehicle dealer. In addition to this, the dealers usually include the state tax and GST in the ex-showroom price. The ex-showroom price is the price used for advertising the product.
The three elements which do not factor in the ex-showroom price are vital for any owner to drive his or her on public roads in our country. And, disregarding or payment these amounts will lead to hefty fines and severe consequences.
What is On-road Price?
The On-road price of a vehicle, as the name suggests is the amount that is paid to permit you to drive the vehicle on public roads, as per the rules mandated by the government. This includes the registration of the vehicle, road tax, and purchase of insurance. In simpler terms, this is the final price the buyers have to pay in order to take their vehicle home.
To determine the on-road price of a vehicle, you can find the on-road price calculator available online to get an approximation of the value or get in touch with the vehicle dealer. Listed below are some of the factors that determine your on-road price.
Registration of the Vehicle - The registration of the vehicle is done at the local Registration Transport Office (RTO), every time you purchase a vehicle. These days, most dealers take the responsibility of registering the vehicle. This vehicle registration is done to give your vehicle a unique identity. The registration helps identify the state and the RTO, where the vehicle is registered as it features the state code and the RTO/Area code. The registration charges can differ from state to state. Further, you will be expected to pay additional charges, if you want a special or a fancy registration number. The registration number is displayed on the vehicle’s number plate.
Road Tax - The road tax is paid to the government to permit the owner to use the Indian public roads. This tax is calculated based on a certain percentage of the ex-showroom price. It is usually between 3% and 20%. The validity of this payment is for ten to fifteen years.
Vehicle Insurance - This is a mandatory requirement as per The Motor Vehicles Act to ensure road safety. Not adhering to this will lead to a huge fine and severe consequences including the suspension of your license. You could either get just the mandatory third-party insurance or purchase comprehensive insurance that covers both third-party and own damage insurance. Most vehicle dealers in India have tie-ups with insurance providers and help you choose the right coverage that is ideal for your vehicle. However, you could also opt for a different policy or a different insurer.
Green Cess - In order to reduce the carbon emissions due to automobiles, the government of India has banned diesel vehicles. Further, they have initiated the European emissions standards in India through BS-VI norms. Because of this, there is an imposition of 1% Green Cess to all the vehicles on the Indian roads that are above 2000cc. However, this does not apply to vehicles with engines less than 2000cc.
Extended Warranty - The manufacturer of the vehicle gives a certain warranty period for most vehicles. It is mostly restricted by time or distance travelled. For example, it can extend up to a year, or a fixed number of kilometres travelled by car. However, this can be extended by the owner by paying extra. This payment will help increase the resale value of the vehicle.
Apart from the above-mentioned factors, there are other items that can be included as optional charges due to the installation of new features or accessories offered, logistics charges, and annual maintenance charges, which includes cleaning, servicing, roadside assistance, etc. These chargers may seem unnecessary, but they will help you in the longer run.