Hello, and welcome to another episode of Simplified on PowerDrift, where we take complicated ideas
and break them down into small bite sized pieces.
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Today we're talking about a very sticky idea called handling charges, which seems to appear
every time you try to purchase a vehicle in India.
Now, what you should know is that it appears under various names, so, handling charges,
logistics charges, etc. are all names used to represent more or less the same thing.
This usually appears on your final bill,
so normally, the items that you're supposed to see are things like,
ex-showroom price, RTO charges, insurance and in there usually it's something small
and small as a percentage of what you're purchasing,
but not always a small number, so we've heard 5000 to 50,000 rupees or more
appearing as handling charges and what are these. So first I called dealers
and what the automotive dealer said is that, these charges are pretty legit in the sense that,
they do have to move vehicles from the stockyard to the showroom, if they've been parked
at the stockyard for a while, they get dirty, so they have to be cleaned up, dealers will
usually try to give you at least some amount of fuel, although this is a slightly grey area again.
I've had bikes come to us with almost no fuel in them and you struggle to get to
the petrol pump, brand new.
I've also had dealers who've told me in advance, that this is going to be, and I've
paid them extra money to ensure that I had a full tank of gas when I took the bike out
of the showroom as well.
So, these are handling charges, and they cover the cleaning and the polishing
and all of those of the cars before they deliver it to you.
But, what you should also know is that, in 2012, the Supreme Court, in a court case said that
handling charges were completely illegal.
The representative of the dealers told them, that look, we put fuel in the car, for example
and that's a legit expense and therefore, we bill it as a handling charge
and the court basically said that, you can't really sell a car without fuel, right?
What's the customer going to do? Take delivery and then carry the car to the nearest fuel station?
So this is a little bit of a grey area
and when I spoke to the OEM, the manufacturers, they all had something to say about it
and they said, in most cases that they don't support the idea of handling charges in the sense
that this is not something that they are directing the dealers to do.
Some manufacturers do have a little bit of control over what is billed to you as a handling charge.
Other manufacturers say that this is something completely that the dealers do on their own.
As I understand it, it's a bit of a grey area because
apart from the supreme court judgment in 2012, there have been a number of
state level court cases where again, the handling charges have been decried as illegal.
However, the dealers do tell us that handling charges are pretty common
and if you're out there trying to buy a car or a motorcycle, chances are you will come
up against it. So what can you do about it?
Well, obviously the first thing you can do about it is take them to court or to a consumer court
and that's to me is the long-winded process of doing it,
although that probably is the right way to do it.
But, court cases in India can take a while
even consumer courts don't operate as quickly as they should in some ways.
So, I would say that the difficult way to do this is to take this dealer to court and try
to get your handling charges back.
The easier solution is for you to realize that you're well within your rights to just say no.
Which means, once the dealer gives you a pro forma invoice and says this is what the vehicle
is going to cost you, you look at the breakdown of the cost and simply say that these handling
charges, I refuse to pay, this usually is followed by a negotiation, you can negotiate down to zero,
and I would say, that if you can negotiate it down to zero and say, you save 10,000 rupees,
10,000 rupees is a lot of petrol
and that means your vehicle will go a long distance on the money you just saved.
So, the next time you're out there buying a vehicle, you see handling charges, you should
try and negotiate your way out of this.
In the process, I discovered a couple of other areas where you can save a little bit of money.
The first thing that you want to check is the cost of insurance.
Now, by law, in India, the insurance authority says, you're free to buy insurance from whoever
you choose, as long as it falls within the rules and whatever the rules are applicable,
that's the five-year third-party insurance, et cetera, et cetera,
within the circle of those rules, you are free to buy insurance from whoever you choose
to whatever gives you the better deal.
So in that sense, most dealers will try to bundle insurance into your vehicle
and honestly, you're well within your rights to say no, you don't want the insurance from them,
you'll do insurance on your own, you do need to do the insurance so that
the RTO process can be completed.
The other scam that we've heard of is that, sometimes the dealer might bill you,
say one lakh rupees for RTO charges.
But, when you receive the bill from the RTO, you might discover that the bill is actually
only 80,000 rupees, and that 20,000 rupees, again is something that is a little bit of
a grey area, it's the dealer making a little bit of money on the side.
The dealers do allege that the RTO guys are not always corruption free, and they do have
to pay them off to get processes either done or quickened
and in both cases, there are problems.
I was given an example of where, the new rules say that, vehicles don't need to be brought
to the RTO for certification and therefore dealers can self register vehicles.
But I heard a case, actually two cases, where the vehicle was put on hold and that stops
the vehicle data from being uploaded to Vahan
and that is something that is still within the RTO's control.
And ultimately this particular RTO agent had to be paid a little bit of money,
basically, the palms had to be greased, so that the data could be uploaded to Vahan
and the process could be completed.
So, as usual, we have moved forward one step, we've created a better system with
the self-registration and the electronics in it,
but at the same time, we have taken a step back in the sense that
people have discovered new loopholes to work around it.
So, the takeaway from this video is, handling charges are completely optional,
they happen more or less at the dealer level, you don't really have to pay them
if you don't want to, just say no, your worst case, you negotiated down,
so instead of 10,000 rupees, you end up paying 2000 rupees.
Your absolute worst-case scenario is, it doesn't work out like that, you have to find another
dealer or you have to go to the court and pursue a fairly complicated way of buying
a vehicle if you want to.
And while you're in there, do remember that insurance is in your control.
If you don't like the insurance prices that are being quoted to you,
look on the market and find your own insurance.
Many dealers will resist this quite violently, but,
the fact of the matter is, you're well within your rights to purchase your own insurance.
And finally, when you do get the vehicle at home, you get the RTO receipt with it,
check that the RTO receipt and the bill that the dealer's given you is exactly the same.
If there's any difference, technically the dealer should be giving you a refund.
Thank you so much for watching.
This is Simplified.
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