A guest post by long-time member and travel/car blogger Shrinidhi Hande. Check out his blog at www.enidhi.net
Couple of years into our first job, it is very tempting to buy a brand new car. Many of our peers would have already done that, most of the friends are posting photos on facebook about roadtrips they had in their new cars, auto advertisements are very inviting with discounts and offers, guys at showroom almost convince you that NOW is the best time to buy the car.
But then, is it that easy to buy a car? Probably it is very easy to Buy a car. But running and maintaining it is another story. When you calculate your monthly income and expenditure and decide what EMI to go for, you need to provide for many other expenses that come with the car, uninvited.
This post lists various expenditures you would incur when you buy a car. You should factor all these expenses to arrive at total cost of ownership and finally decide if it is really worth buying a car.
Insurance Cost: An SUV worth Rs 15 lakhs commands Rs 60000 a year in insurance premium. That is Rs 5000 a month in insurance premium alone. Irrespective of your usage or how nicely you drive, you need to keep paying this amount every year.
Interest cost: While it is easy to get an auto loan, the interest you pay over years amount to several lakh rupees. Multiply number of EMIs with how many months you need to keep paying it, deduct loan amount- you will get interest paid.
Service and Maintenance cost: Cars need periodic care. Despite having best of the maintenance package, expect a minimum cash outgo of Rs 5000 for cheaper cars per service, more as the car gets expensive/older. Youll need servicing twice an year approx. under normal circumstances, more in case of excessive use, damages etc.
Fuel cost & Toll Cost: Fuel is getting scarcer by the day. Price difference between diesel and petrol is narrowing. Driving cost per km could be around Rs 4- 5 or more, depending on fuel cost in your city and your cars fuel economy. More and more roads are becoming one way or a U turn is too far, forcing extra kms in every drive. Idling in traffic, parking the car in open sun and other factors cause more fuel wastage. Toll cost alone could be more than the cost of a sleeper class ticket to your destination.
Parking cost: At your apartment you will likely have to shell out a few thousand rupees more each month for a reserved space to park your car. If you go to a mall during the weekend, it costs couple of hundred rupees to park your car for a few hours. Almost everywhere, be ready to pull out Rs 50 or more to park a car (Dont you wish your car came with an ATM machine instead of CD player?)
I hate Bangalore Traffic! Your joy of driving into office in a brand new car will die down within days, if not on Day 1. Held up in peak our traffic, youll definitely think I was better off in Office bus where I could have read a book or catch up on missed sleep or had I came in my bike I could have zipped past all these cars. How-much-ever you enjoy driving, spending hours held up in peak hour traffic, moving forward inch by inch is certainly not fun. Soon youll join the group of people who crib about traffic problems, without realizing that youre indeed contributing it, by adding another car to the already congested road.
Let us take the car to everywhere- to gym and even for vegetable shopping: Without a car, you would have got some exercise while you walked to neighboring store or to a bus stop to catch a bus. With a car, it is tempting to take it everywhere, even to places which could have been covered by foot. Any time you save in covering the distance will be lost while searching for a parking spot. A bit of exercise youd got in vanished and youll be spending more money on fuel and also on your health.
Oops! Theres a newer model for lesser price: Though your sales rep told you that this is the best car you can buy and the price is also the greatest deal you could get, within months youll see better deals being advertised and newer models with more features in the market. Youll feel I should have waited a little longer. Understand that sales folks need to meet their monthly target and wont have any motive to advise you about upcoming facelifts or future deals.
What’s the smart thing to do?
Avoid buying a car or delay your car purchase as much as possible. Use a two-wheeler or employee transport for your daily commute. This saves you lots of money while keeping the options open. You can always rent a car from Zoom on need basis.
If you still have to, buy a smaller, cheaper, and more fuel-efficient car. For long trips or when youve lots of people, rent a SUV like Safari, Scorpio of XUV500 from Zoom.
Company financed car leases are also a good option if youre buying expensive cars- these help save income tax.
Zoom’s friends at the automobile companies wont like a post like this. But this is the reality. Owning a car costs much more than what you thought it would. Unless you have good every day usage, it makes lot of economic sense NOT to buy a car. Besides saving money, youll be helping mother earth and doing your bit not to worsen traffic woes. You may feel your status symbol will be lowered if you dont own a big car but just think what all you can do with the money saved by not buying a car: a foreign trip? Property purchase?
Buying the car may be right option for many people. But do the math yourself and decide whats best for you.