Big stop towards feeling like an independent adult is buying
your own car. Before you walk to the bond or showroom to buy a car, it is
important that you familiarize yourself with some key terms before signing any
paper work.
Credit sales
Credit sales are mostly used by banks and
other credited financial institutions after entering into a patternership or
agreement with a given car dealership. The bank pays for the car of your choice
and you enter an agreement with the bank or financial institution about monthly
remittance to the bank and the period for which you are to pay the agreed
amounts.
Delivered Duty Paid (DDP)
This means that the price you are being
charged includes all applicable taxes as well as registration charges. It is
also sometimes known as the on the road price and is applicable when buying a
brand new car with zero mileage from a showroom
Cost insurance and freight
When you are buying a car in Uganda
under cost insurance and freight, it only carries the cost of the vehicle that
is already in Kampala before taxes that are normally determined by Uganda
revenue authority. Besides paying for the cost of the vehicle you also have to
pay for taxes before you can have it on the road.
Installment payment
You can still own a car of your choice
through installment buying or payment. For example if you wish to buy a Toyota
Land Cruiser VX and it costs shs 100m the dealer usually asks that you pay
between 70 to 80 per cent of the cost of the car and then discuss the terms of
payment of the remainder.
others include:
1.
M.S.R.P. (The price the dealer wants you to pay)
The Manufacturer’s Suggested Retail Price, commonly known as the List price or
window sticker, is the price set by the manufacturer. This is typically the
price that the new car dealer would like you to pay. Although the overwhelming
majority of new cars are sold at less than the M.S.R.P., some dealers will hold
out for this price on a very hot-selling vehicle that is in high demand and
limited supply.
2. Dealer Invoice Price (The price the dealer pays)
Every manufacturer sends an invoice to the dealer for their vehicles as soon as
they are delivered to the dealer. The dealer will typically pay for the vehicle
via a prearranged line of credit. Commonly, the dealer will start paying
interest charges from the first day onwards. The dealer invoice price is
confidential.
3. Hold Back/ Marketing Assistance
Most manufacturers help subsidize the interest charges and
marketing/advertising that a dealer incurs by paying the dealer a holdback and
or marketing assistance dollar amount, after the vehicle has been sold. This
amount typically ranges from 2.0% to 2.5% of the dealer invoice price. Dealers
will rarely consider this when negotiating a new car deal.
However, since this helps cover some of the dealer’s expenses, he/she will
typically accept an offer of only 3%-5% more than the dealer invoice price.
4. Factory To Consumer Incentives (Savings for you)
In an effort to stimulate sales, many manufacturers will offer incentives to
the consumer (you). These incentives are commonly advertised in the media and
can consist of low rate financing/leasing rates, such as 0%, cash rebates, such
as $2,000, or a combination of both. If a manufacturer is offering you 0% or
$2,000 cash, the emphasis is on the word OR; which means that you cannot get 0%
financing and $2,000 cash. You have to decide between the two. In some cases, you
can combine the 0% and $2,000, but not very often.
5. Factory To Dealer Incentives (Additional savings for you)
Commonly referred to as hidden or secret rebates. Internally these
non-advertised dealer incentives
With the above terms fully satisfied you can go ahead and
own a car of your own dream.
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