Ex-Showroom Price and On-Road Price: Whenever you go to a car or two-wheeler showroom and enquire about the price, you would see two quoted prices. One of them would be an Ex-showroom price, and another would be an On-road price. The price that you pay while purchasing the automobile is called the On-road price. The On-road price is always approximately 10% more than that of the Ex-showroom price. While making the budget for purchasing a vehicle, one should always look at the vehicle’s On-Road Price.
Most people don’t know the difference between the prices and assume the Ex-showroom price as the final price of the vehicle and get confused. The On-road price of a vehicle differs from its Ex-showroom price depending on the model of the vehicle.
Here in this article, we will discuss the Ex-showroom price and On-road price of a vehicle and the other charges associated with the cost of the vehicle.
Prices Associated With Vehicles
It is prevalent that automobile and vehicle prices vary from one state to another in India. Various factors or charges contribute to this variation. Some of the common factors that contribute to the price change are the Ex-factory price of a car, the Ex-showroom price of a car, and the On-road price of the car or motorbike.
Ex-Factory Price: Ex-Factory price can be defined as that price, which a car or bike dealer pays to the manufacturer to lift the vehicle from them. In simple words, it is the price that the showroom or dealer pays for the vehicle to the manufacturer. This price is not for the public as it is primarily an exchange between the dealer and the manufacturer.
Ex-Showroom Price: The ex-Showroom price can be defined as the price at which a car or motorbike dealer sells the vehicle to the customers. The Ex-showroom price is made up of different charges, such as dealer’s margin, transportation cost, applicable excise, State taxes, and Octroi charges. The Ex-showroom Price of any vehicle is called its base price and excludes registration, insurance, and loading charges.
On-Road Price: The On-Road price of a vehicle is the actual and the final price that a customer pays for acquiring the vehicle. It is also called the Invoice value of the vehicle. It includes certain other charges such as State Registration charges, Lifetime road tax payment, Mandatory insurance and the dealer’s handling or logistics charges. Apart from all these compulsory charges, the On-Road price of a vehicle also includes some optional charges. The option charges that are included are Accessories cost and additional warranty coverage. If a dealer is providing discounts, it will be shown and deducted while calculating the net On-Road price of the vehicle.
More About Ex-Showroom Price
In a more straightforward sense, the Ex-Showroom price is the price that the dealer charges from the customer for procuring the vehicle from the manufacturer and the tax that it pays on procurement. The Ex-showroom price is also known as the supply price of a vehicle. The Ex-showroom price of a vehicle includes State taxes, Octroi, Transportation, and Handling charges. The Ex-showroom price of a particular vehicle differs from state to state, depending upon the laws and cost of transportation. For example, the Ex-showroom price in Mumbai is higher than that of Delhi.
More About On-Road Price
When the Ex-showroom price is added to certain other charges, it constitutes the vehicle’s On-Road price. Apart from the Ex-Showroom price, the extra charges that make up the On-Road are, Registration fees, Lifetime road tax, Vehicle Insurance, and Handling charges of the dealer. Below, we have mentioned the complete details of all the charges that make up the On-Road Price.
Every new vehicle has to be registered with the Regional Transport Office, and this registration provides the car or motorbike with a unique identity. Registration charge is the amount charged by the Regional Transport Office for the registration of a Vehicle.
All the vehicles are tagged with a licence plate or registration number to provide them with a unique identity. This licence number is issued by the district-level Regional Transport Office in every state. The licence plates in India consist of three parts:
- The first two letters of the licence plate indicate the state in which the vehicle is registered.
- The following two digits indicate the district number where the vehicle is registered.
- The last four digits indicate the unique number given to the vehicle. Due to heavy registrations, these digits are combined with letters at times.
For example, a vehicle registered in West Bengal can have the following format of a licence plate: WB-01-BB-1234.
The licence plate of private vehicles is designed with black letters and numbers on white background. In comparison, commercial vehicles have a yellow background with black text on them.
The Registration charge in a state can differ from another, depending on the cost and type of vehicle.
Lifetime Road Tax: Lifetime Road Tax is the amount of tax that has to be paid by the vehicle owner before using the vehicle on public roads. The Government charges road tax to improve roads and construction of new and better transport systems. Road tax is always subjected to state rules and traffic regulations, so it differs from state to state. When you purchase a vehicle, you pay the road tax for a lifetime in the state in which your vehicle is registered. But, if you shift from one state to another, you have to re-register your vehicle again in that state and pay lifetime road tax once again.
Vehicle Insurance: Vehicle insurance is one of the significant components added to get the on-road price of a vehicle. Vehicular insurance provides financial protection to cars, motorbikes, and other types of vehicles. The vehicle insurance provides financial protection against any physical damage resulting from an accident or fire breakout. It also provides financial assistance against theft of the vehicle. Different insurance providers have different insurance rates depending on the type of vehicle.
Dealer Handling Charges: The dealer claims handling charges from the customers to compensate for its cost of handling the vehicle till the point of delivery. The handling charge includes transportation from the warehouse to the showroom, basic fuel charge, number plate charge, cleaning charge, and other sundry expenses. The handling charge differs for different segments of vehicles and even from dealer to dealer.
Which Price Does A Bank Take Into Account
Now that we have discussed in detail the Ex-showroom price and On-road price. The big question is if a person wants to buy a vehicle through bank finance, which price will the bank consider while sanctioning a loan?
So, if you are purchasing a vehicle on finance, the price considered depends on which bank you select. For instance, if you finance your vehicle from a private bank, you will get loans of up to 85% of the Ex-Showroom price. Private Banks consider Ex-Showroom prices for the calculation of loans. If you finance your vehicle through a Government-owned bank, you can get loans up to 85% of the On-Road price. However, the percentage of loans may differ from bank to bank.
In The End
When you plan to purchase a vehicle, it is essential to look for the On-Road price of the vehicle, as in the end, it would the final price you will pay to acquire the asset. Knowing the On-Road price of a vehicle will help you to plan your finances efficiently.