Do you plan to give a car to your parents? That is quite a good thought. But read on to know what all you should be taking into consideration before deciding on this.
New or used car
This is going to be the first and foremost considerations. Purchase of both new and a used car have their own merits. While a new car will be maintained under your supervision right from the beginning and you can be assured of the quality of maintenance. This will definitely aid the longevity of the vehicle. On the other hand today even the used cars come with certification from the car makers and is also accompanied with one year warranty.
Cost of vehicle
The cost of vehicle is another consideration. The new vehicle will definitely cost higher than a used vehicle. You may want to evaluate a used car as against a new one where the age is not very old and has not run much. If you have patience then such a car may be available from the certified cars by manufacturers. However, you may not find a lot of difference in the overall cost.
Make and model
This will be another factor that you would need to consider. Owing to varied requirements and needs of consumers, the car makers keep introducing new models every year. This actually gives you the opportunity to weigh and chose a car that would suit your parents’ need the most. First decide the make and then you can zero down on the model as per the need.
Loan or self funded
Another factor that has to be taken into account is source of funds for the purchase of car. It can either be bought through outright cash payment or can be bought through the loan. You would need to work on your finances on how the car would get purchased? This factor would also have an impact on the purchase of a new or a used car. While the used vehicles also get funded but the car loan interest rate is higher and this will actually escalate the over all cost of the car.
Registered in their name
While you would want to gift the car to your parents, you may find it difficult to have it in their name, especially if the car purchase is being funded through the loan. Since the loan will be in your name, the vehicle will also be registered in your name only. In case you are taking a loan in your name then it is advisable that you check your free CIBIL report before applying for the loan.
The usage of car
The quantum of usage by your parents will also have a considerable impact on the decision. In case the car is going to be sporadically used owing to retired life style then the car make and model that you may need could be different from the one if they are leading an active life where the car use may be higher or frequent. The actual usage should also be taken into account while arriving at a decision.
Driver or self driven
In case any of the parent wishes to drive the car, then you may want to buy one which has a more smother ride and even may be an auto transmission. As against this situation, if the car will be driven by the driver, then you may want to buy a manual transmission only and one which may not be excellent in driving pleasure.
Apart from these there are allied costs like insurance, maintenance and must be considered if your parents are to foot these bills. Their economic strength will come into play for taking a decision on this.
In case the car is being gifted it may attract some taxes like gift tax. So it would be advisable to seek clarity from a chartered accountant on this before taking a call.
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