So Called ‘Certified’ Used Cars – Myths & Facts Exposed

[Autofact]

LOANS & THE STORY BEHIND THE SCENES:
Every showroom has tie ups with atleast 4 - 5 banks/financing companies.

Interest rate for new cars is around 15%approx. What happens behind the scene?

ABC Bank Offer: (ABC - a reputed bank, let's discuss the name later)
Interest offered by the bank varies from 13.75% to 16.5% for used cars not aging more than 6yrs from the date of application. This interest rate is applicable only if you are applying through the dealership.

If the interest rate paid by the customer is 16% of the funding amount. (FUNDING AMOUNT = IDV Value)
The bank pays a one time commision of 1 to 1.75% of interest to the dealership. The rest 14% is the money the bank earns. In this the processing fee is not included. Here is a quick example.


ABC loan for a car (applied through the dealer)
Used Car selling price: 3,00,000INR
IDV value of the car (mentioned in the insurance paper): 1,80,000INR

MAXIMUM LOAN AMOUNT POSSIBLE = IDV Value = 180000INR
INTEREST RATE OF 16% per annum for 2years = 1.8lacs x 32% = 57600INR

COMMISION TO THE DEALER = 2% of only the first year = 3600INR
ACTUAL INTEREST THE BANK EARNS = 14% = 54000INR

ACTUAL AMOUNT THAT THE CUSTOMER PAYS BEFORE TAKING DELIVERY OF THE CAR is as below.

Down payment: 10000INR
Loan amount: Funding amount (180000) - processing fee (approx fee is 3000INR)
= 177000INR
final payment by customer = CAR PRICE - down payment - loan amount + processing fee
= 3,00,000 - 10,000 - 177000 + 3000
= 1,13,000INR


LOAN OFFER BY THE ABC bank, if you approach them directly at their branch.

INTEREST RATE: 14% if you work in a top corporate company, if not 15% max.

FUNDING WILL REMAIN SAME (IDV VALUE OF THE CAR). However in this case, you have to follow up with the bank for quick approval. You will have to book the car you are interested in, by paying a non refundable amount to the dealership & collect the SMART CARD COPY + INSURANCE COPY to the ABC bank executive. You will save easily 1% per annum on the interest.

FACTS:
1. Every auto loan executive has the capability to wave off atleast 50% processing fees.
2. Usually they do this only if the funding amount is big
3. Even if you dont have all the documents required for the loan eligibility, the executive will promise you loan approval & collect documents from you. This is done for two reasons - if the loan gets approved, he gets incentive, customer gets funding for his car & its a win win situation.

If the loan gets rejected, then the customer is disappointed, the executive is not given any incentive, but he is completing his target (minimum no:of logins per month is approx 5 per executive).

Booking amounts at the dealership will be non-refundable, never pay anything more than 10K as booking amount. DO NOT PAY REMAINING CASH BEFORE TAKING A TEST DRIVE OF THE CAR on the delivery date.

 

[sethumurugan]

Really good startup autofact.

That is the reason I was scared to go for used ones when i wanted to get a Diesel car. Thank god I took a right decision of going for new one.

Actually I wont say all and every used car is bad. But we should have luck to get a good one.

 

[Surfer]

Very good info. I have seen many cars at Mahindra first choice service station who's denting penting work is done or going on.They generally do these kind of cosmetic works.

 

[Gurrala74]

Hmm

Welcome to TAI Auto Fact !!

Wonderful information buddy, I hope most of the people do not know anything like this who go to a used car seller.

You have cleared lot of my doubts about these cars and most of them are correct as per my thinking.

This is the main reason more than sales, service centers are key for any dealer these days and also we are able to see lot of companies are stepping into this multi brand used car selling.

On wheel balancing and alignment, I had my own doubt while getting it done at authorised dealer and my doubt is clear now that we cannot believe that they have done it, so it is better to get it done outside in-front of our eyes.

Thanks again for post such a nice information buddy and I think it is always better to buy a car selecting from the classified posted by the owners and get the car checked with a good mechanic where we get the good car as well best price too.

Anyway because plenty of these kind of reasons, I never go for a used item at all as at least the brand new one gives you a 5 years peace of mind at least

 

[alexddas]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

@Autofact
Welcome to TAI.

Waiting for surprises! as you Guaranteed at the beginning of the Thread.

Please go through similar threads too as you are new to TAI.

Is there any way to check a professionally tampered digital odometer other than the one mentioned before (because it wont reflect if done professionally)?

 

[jayadev]

Myths:

1. Certified cars are fully Refurbished
2. Cars are certified by PARENT COMPANY Engineer
3. They are as reliable as new cars
4. Prices are fair for the quality you get
5. 100% Accident free cars are sold in THE CERTIFIED CAR OUTLETS
6. many more points to cover

I very much appreciate your effort.
But this hold true for every other product we purchase in market.
Every second product has a counterfeit.

The brand spanking new car in the showroom could be refurbished demo cars run with unplugged odo (there are so many cheating cases around).

prices given at showroom is also inflated untill customer is about to scoot or poor sales then we are confronted with discounts and price cut downs.

Honda Jazz is living example. I was quoted for 7.5 lakhs then they came down to 6.8lakh for ready cash finally Honda themselves slashed it to 5 point something lakhs

I fail to see much of difference in daytime robbery between used and new car.

 

[anshuman8]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

Autofact , this thread is a real eye opener for people who are looking to buy used cars.
Is there any way we can get the actual mileage the car has covered even if some one tampers the digital odometer?

By the way this is my first post in any automotive forum.

 

[Autofact]

I am still working with a certified cars outlet, till date I have never seen, heard of any tool that can directly assess the originality of the odometer. I am also looking for some answers

apart from tyre manufactured date, in some cases we can ask for the complete service history, showing the last service date & kilometer reading, if they match with the routine interval, chances of tampering are low. however this method is not useful for 3+ years or older cars since very few people actually follow the service routine at the authorised company dealers. Instead they try to save money by just changing oil & brake bleeding done at local workshops.

WHEEL ALIGNMENT TRICK.

Wheel alignment is usually offered as a part of the pre-delivery service offered by the dealer. But why are they anyway doing it?

Reason 1: To convince you that the price they are offering is total "PACKAGE"
pre-delivery service + wheel balancing + alignment + AC service etc etc

Reason 2: THE REAL REASON MOST OF THE TIME, is to avoid highlighting any hidden issues with the car. like lower apron damage/counterfit arms replaced etc. more on this later.

REASON 3: Getting the wheel alignment done at outside shops can sometimes reveal disturbing facts, which might get the customer angry & walk back towards the showroom asking for a refund.

APRON - KNOWLEDGE ABOUT THIS IS A MUST.

Unlike Scorpio, Sumo, Qualis kind of cars, most of today's cars are monocoque, meaning they dont have a seperate ladder type beam to depend on. Their structure itself is pretty hard, strong & weight saving.

In most monocoques, it is a combination of sheet metals punched together + pillars + stepney wheel well + cross members + APRONS + etc etc that together form as a strong single chassy.

The APRON is the front wheel well area, any work done in this area simply means the car has no/very little value. The two aprons are like the shoulderbone for the whole car. wheel alignment is very much dependant on the integrity of these two. A FACTORY PAINTED CAR (apron area especially) will not rust for atleast 6 - 7years minimum. However if any welding/ part replacement/ tinker work has been done. it starts to rust. sample pic below from a Maruti car.





For example:
The resale value of a 2009 model Alto Lxi is approx. 1,80,000/- assuming that there is no apron work/ similar chassy related works.

The resale value of the same Alto is no more than 1,40,000/- under any circumstances if the apron is tampered. If the apron is replaced, the value still plunges. Most certified cars will have genuine factory given, untampered APRON cars.

However their honesty is tested when a car with a bent APRON is bought knowingly/unknowingly. A bent apron can cause lots of problems in the short & long runs

1. Steering & wheel alignments issues
2. suspension life & noise
3. actual working of the crumple zone etc

The easiest way to tackle the issue is to adjust the camber settings & get the wheel aligned. This way the dealer saves over 20K easily. Replacing APRON is too costly, replacing lower arm wont help much, car-o-liner machine is as good as its operator. This is one of the main reasons for the FREE WHEEL ALIGNMENT OFFER.

My own company has sold off atleast handfull of cars every quarter with the wheel alignment trick. Till the first one year/2/3free services are utilised the customer wont visit any wheel alignment shop (most probably) hence the truth is hidden for long enough for the warranty to expire.

The term accident means different to each one of us. The showroom limits it to the chassy & ignores everything else.

PATHETIC BUYBACK RATES FOR SOME CARS:

1. FIAT PALIO - 50,000/-
2. OPEL (any car) - 40,000/-
3. INDIGO PETROL - 60,000/- to 1.20lacs irrespective of the condition
4. M800 type 1 - 20,000/- max
5. Alto Std - 75,000/- max
6. VERSA - expect no more than 1.30lacs
7. EECO - 2012 DEC MODEL - less than 90 days old - 2.60lacs highest (worst) offered till date.
8. FORD IKON 1.3 - 75K, Ikon 1.8 - 60K

Despite the sad buy back/ exchange prices still customers sell their cars to us. mainly because of the PARENT COMPANY BRANDING. The parent company takes a share (in our case 35% of net profit of each certified car) in every deal.

The parent company also makes money in warranty offered, accesories sold, insurance renewal & also in finance in some cases.

 

[sethumurugan]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

To your list pls add 2010 model spark took delivery in 2011 with 4k in odo was 1.85k which bought for nearly 4l.

Once I just wanna check with TATA guys that was the figure.

Worst part is, the Chevy dealer him self [where I took the car] offering the same price. I know spark might not have resale value but never thought it will be so bad.

 

[Autofact]

There are too many reasons (as per company) for offering such a low resale of spark.
here are few of them

1. Looks similar to Matiz (so selling it once we buy it is difficult)
2. Spark engine IIRC has 8valves for 4cylinders which is a dated design.
3. sheet metal guage feels thinner than Alto/Beat etc
4. Spacious interiors (I love it) but the shapes of plastics aren't that nice looking.

Moreover when a company wants to offer low price, we can write a manual type book stating reasons.

Not to disappoint anyone, but some cars have strange cost cutting measures
here are a few to share

1. Swift D'zire - no plastic cladding for boot door inner side even on top end model
2. Alto - 3Cylinders with 4valves each
3. Santro - 4cylinders with 3valves each
4. Indica petrol & spark - 4 cylinders with 2valves each

one main reason for that is spark has a 4cylinder but 8valve engine - a design so old it's similar to the Old shape Zen & Indica petrol models.

 

[alexddas]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

I am still working with a certified cars outlet, till date I have never seen, heard of any tool that can directly assess the originality of the odometer. I am also looking for some answers

For your information there are many equipment's Chinese made back here in poor kerala which can set an odometer to a desired kilometer reading with out using a tool to tamper the odometer.It is directly connected to the original socket behind the odometer,Charging you 500k to alto to 5000k to bigger premium cars.This equipment is out in the market for a minimum of 2 years and kept secret as tampering an odometer is a crime and can be charged a cheating case against the one doing it.

Brother please go through similar threads,as you are new to the forum.The links are at the bottom of the page.
Some points you are pointing out are already posted and discussed in different threads,please go through them and give some information on which we had missed out.

 

[anshuman8]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

Now buyers have to give back their cars to Finance Co due to fraud by dealer. The dealer is a franchisee of MFC.

Source :Dealer held for fraud, buyers lose cars - The Times of India

Thanks,
Anshuman

 

[Lucas]

Regarding ODO reset, got a link from Youtube . Odometer-Rollback-Odometer-Fraud-Mileage-reset-Mileage-Correction. PHONE: 01149-176-53322224 - YouTube

 

[alexddas]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

Regarding ODO reset, got a link from Youtube .

Exactly this is the way it is done,i had seen that particular same equipment back here.

@Autofact

Bro, please note that thing it is cheaply available in the market. I saw that thing 2 years back.

 

[Autofact]

Re: So Called ‘Certified’ Used Cars – Myths & Facts Exposed

For your information there are many equipment's Chinese made ................out.

Meaning of the word "ASSESS"
To determine the value, significance, or extent of

My exact line was - "I am still working with a certified cars outlet, till date I have never seen, heard of any tool that can directly assess the originality of the odometer. I am also looking for some answers ".

You have misunderstood the meaning of the word or the whole sentence. All that I wanted to say is - I have never seen or heard of a tool/instrument that can check & identify/prove/determine that a meter reading is geniune or tampered. I too know very well that meter tampering devices have existed for a long long time from now.

May be you know more than me, in such a case you can value to the thread by posting more info. This thread is mainly focused for newbie's who are planning to buy used cars, car enthusiasts might already know most of the things that I have mentioned.