Difference Between a Vehicle’s Ex-Showroom Price and On-Road Price
Have you ever been dazzled over the terms, ex-showroom price, and on-road price? I hope many newbies customers when they are planning to buy a vehicle get into this confusion. The terms are written on every advertisement of a vehicle. But when you go to buy the vehicle, you have to pay much higher. Why does it happen? Of course, both terms are certainly different from each other. But what defines what? We see that the on-road price is always greater than the ex-showroom price. But how is it calculated? Which components depend on pricing a vehicle? Let’s know about the difference between a vehicle’s ex-showroom price and an on-road price in detail.
If you are planning for your new bike or car, knowing some terms can help save your money much. What would you consider before buying? I hope the article will disentangle all the threads of confusion from you so that you don’t fall into pray for those attractive advertisements.
Definition of ex-showroom price and on-road price
The ex-showroom price is the manufacturer’s cost at which the vehicle has been made and the GST. It includes the manufacturer’s profit also. You see the ex-showroom price in every advertisement. It doesn’t include road tax, insurance, or registration charges. So, the price is always less than the on-road price.
As the name suggests, the vehicle has to be on the road. To bring out the vehicle from the showroom to the road, one has to pay some essential charges. The price is calculated on some elements like insurance, road tax, registration along with the ex-showroom price. Thus, one gets the on-road price. A buyer can add more features to the vehicle in exchange for more money added to the price. The on-road price is also sometimes advertised with the ex-showroom price.
Several factors are taken into consideration when making the on-road price. There are some mandatory charges and some are optional. It depends on you which charge you are adding. Now let’s see the charges in detail one has to pay including the ex-showroom price.
Registration is the inevitable part that nobody can avoid. It’s a unique number that is displayed on the car’s number plate. This is mandatory in our Indian law. One has to make a registration number before they get on the road. For this purpose, one has to visit the nearest RTO office where they have to apply for the registration number. A unique number will be assigned then. The cost differs from one state to another. You can get a unique number also but that costs much higher than regulating a simple number. Every number is registered with the state code followed by an area code. Lastly, the four numbers are the main registration number.
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As a responsible citizen of India, one has to pay a road tax that the government has fixed. It is simply a charge which you need to pay before running the car on India road. It varies from 3-20% and the percentage is calculated on the ex-showroom price. Known as a one-time tax, the validity of the tax is for 10-15 years. Make sure you are dealing with the charges carefully because dealers can give you an overcharge. It would be a wise decision to check the appropriate price before paying the amount. Nowadays, anyone can check everything online.
It is mandatory to make your car insured. Nobody knows when the mishap happens. Insurance protects you from any unwanted loss like theft or accident. Driving without an insurance card can cause you into giving penalties. The two main options are available there – Third-party policy and comprehensive policy. You can choose whatever you want and set the budget according to your calculation.
As the name suggests, it’s an extension period of the warranty of your vehicle. It is important when you are going to sell it. There is a fixed warranty period which is provided by the manufacturers. Most of the manufacturers charge an extra cost for the extended warranty. Though this is an add-on charge, it is helpful for your future purpose.
Annual maintenance charge
Here’s another additional charge but it depends on you. The dealers provide an annual maintenance facility which you can avail of by paying an extra amount. You can do so from other mechanic services.
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The handling charge is included in the overall price of the vehicle. This is the charge you pay for transporting the vehicle from one place to another like from the factory to the showroom. You may be cheated here. The dealer can include this charge double times. So, be careful about this charge.
Essential accessories include floor mats, seat covers, or mud flaps. You can choose whatever you need by paying an extra amount of money. You can customize your later also.
This value depends upon the government policy. Recently, the Supreme court has ordered 1% green cess to vehicles that are above 2000cc. Make sure you check your car’s engine capacity.
Tax Collected at Source (TCS)
TCS is calculated on the ex-showroom price. A 1% of tax on the ex-showroom price is included in the on-road price. This scheme is mandatory by the government of India. the dealer has to collect tax from the buyer. make sure that the government has reduced the TCS from 1% to 0.75% on selling vehicles worth above 10 lakh.
So, the final price is always the on-road price, not the ex-showroom price. The on-road price is the most important thing to know because one doesn’t buy a car just for keeping inside the garage. She/he has to bring it out on the road. Till now, I hope you got a better understanding of the difference between an ex-showroom price and an on-road price. All the peripheral charges with the ex-showroom price are accumulated into a huge amount which eventually makes the on-road price.