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Get to know what you should be aware of when deciding to buy a car, build a house, investing for your retirement and many other activities.
Sri Lanka allows import of used vehicles and the latest rules are that vehicles have to be less than two years old.
Prices of brand new are comparatively high due to the duty charges and other taxes applied on vehicle imports.
Used cars are of course cheaper but not by that much. Car prices do not drop much over time due to a combination of currency devaluation and tax increases. As a result, even a two year old car costs quite a bit compared to what a two year old car would cost in other markets relative to the price of a new car.
Buying directly from authorized agent - Depending on the car, there could be a wait period involved in this approach.
Buying from a third party dealership - You can buy a vehicle that a dealer has already brought in to the country. This can be more convenient as there will be no waiting period for the delivery of the vehicle and the dealer would have already obtained the permit when bringing down the vehicle. However, you would end up paying a slightly higher price than if you brought down the vehicle through the authorized agent for the particular brand of vehicle.
Vehicles can also be bought on the second hand market through dealers or directly from the seller through postings on different sites or the newspaper classified section.
There are many reputed insurance companies that provide packages with varying benefits. Banks in Sri Lanka have tie ups with major insurance companies as part of their customer perks, which provide discounts on auto insurance. One such product offered by the Banks is Bancassurance.
During the past 10 years, cars in Sri Lanka have not depreciated in face value (and increased in some cases) due to continuous increases in duty and tax rates (except for a few instances, where rates were reduced temporarily). However, given the interest rates and inflation, it cannot be considered an investment.
There are multiple banks, many leasing companies and finance companies that would let you lease a vehicle.
One thing to watch out for with vehicle leases is that there may be a significant early payment penalty. That means if you decide to sell the car before the lease is paid off, you may still have to pay interest for the whole period! Be careful and look for a loan or financing option that does not strictly bind you to completing the lease!
Personal Loans is another good option to get funds to purchase a car. Unlike in a lease, the vehicle do not have to be mortgaged when you apply for a Personal Loan.