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Old 6th January 2006, 16:41   #16
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Very good writeup Minardi. Its very helpful for salaried class of buyers who need to plan well before they spend that extra buck on a car. Today, a car which was too attractive 6mts back is no more attractive compared to the newer models launched. So it does make sense in investing in a used car but its a personal choice.
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Old 6th January 2006, 17:29   #17
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There is flaw in the calculation. The assumption that one can buy a 3year old car for 50% of its original cost is not always true. In reality , we dont even get a decent 5 year old car , say a Santro, for 50% cost . I have seen people demanding 1L for a 10year old Maruti 800 !

On a lighter note , if everybody is looking for a 3 year old car , we have demand-supply problem . We need people to buy more and more new cars so that there will be a steady supply of old cars :-).
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Old 6th January 2006, 17:46   #18
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Great initiative Minardi!

All we need is an accountant to burst the car passion baloon...

I think most car buyers don't think about the invisible cost that is depreciation. Why don't you also give the cash flow calculation for the month, that way people will understand what happens to 30K monthly income.
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Old 6th January 2006, 21:56   #19
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Quote:
Originally Posted by rejika
There is flaw in the calculation. The assumption that one can buy a 3year old car for 50% of its original cost is not always true. In reality , we dont even get a decent 5 year old car , say a Santro, for 50% cost . I have seen people demanding 1L for a 10year old Maruti 800 !
I think most cars are available for 50% of their value after 3 years.
Eg : Ikon 1.3 & 1.6, Corsa1.4 & 1.6, Accord (coz of the newer accord in market), Sonata,Vectra, Camry, Esteem, Palio, Indica(Petrol),Lancer 1.5 &1.8 , Octy petrol 2.0 , MB C180 and the older diesel, etc

Some holding its strength like the Alto, Indica(diesel),City, Zen,Wagan R Santro,Optra, Corolla, Octy(diesel) are also available for 50% of its value post 4 years ( not a day more than 4 years).
This is w.r.t Bombay used car market for clean cars and I am preety confident about it.

Eg:(1) 4 year used Vtec with full service records are available for 4.5 as preowned cars at Honda showrooms( Linkway in this case).If I am not wrong OHC 1.5 Vtec used to cost 9.5 on road Bombay post discounts if there were any.
(2) 3 year old Lancer SFXi for 4.2-4.5

Last edited by dipen : 6th January 2006 at 22:01.
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Old 7th January 2006, 09:41   #20
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Quote:
Originally Posted by Minardi
Let’s see the cost of ownership during the first year.
Cost of money (7.5%): Rs. 37,500
Cost of insurance: Rs. 15,000
Cost of fuel (assuming 10,000 km/yr, 12 kmpl, Rs.51/litre): Rs. 42,500
Depreciation (20% during year 1) Rs.100,000
Maintenance: Rs. 12,000 (1000 per month)
Cleaning Rs. 3000 (Rs.250 per month)
Self-driven (so no driver salary)
Total Rs.2,10,000 for the first year or Rs.17,500 per month
After speaking to my accountant, for a self-employed professional or businessman, the following tax benefits emerge:
From your gross income many payments are fully deductible, provided you use the car for your business or profession (wink, wink) :
Interest paid
Insurance
Depreciation @ 10 percent
All maintenance and petrol bills.
Therefore your gross income would be reduced by the above deductions, and only then income tax would be chargeable. Quite a lot of benefits it would appear.
Of course this does not apply to salaried persons.
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Old 7th January 2006, 14:22   #21
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Depreciation is @ 15%.... from this financial year onwards...
Previously it was @ 20%...
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Old 7th January 2006, 16:30   #22
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3 yrs ago when I purchased my flat my Dad said : Congrats son, u just "invested" money in the biggest "assest" purchase of your life..

2 yrs ago when I purchased my car, my Dad said : Congrats son, you have just "wasted" money in the biggest "liability" purchase of your life...
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Old 8th January 2006, 04:00   #23
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Quote:
Think twice. Think umpteen number of times. Let your passion for cars not allow you to siphon money which should ideally have gone to your parents, your wife, your kids and their future.
Excellently said!!!!

Yes, I personally agree with you totally. People are often tempted to buy an expensive car and later they repent maintaining that white elephant.

I suggest buy a cheap car which serves your 80% needs.
For other 20% needs (to get the supercar thrill) simply hire that car for a day or two and enjoy the ride.

The car should be a pleasure not a headache.
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Old 8th January 2006, 11:23   #24
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Quote:
Originally Posted by sbasak
I suggest buy a cheap car which serves your 80% needs.
For other 20% needs (to get the supercar thrill) simply hire that car for a day or two and enjoy the ride.

The car should be a pleasure not a headache.
You think you can hire a modded car whenever you feel like having fun?

This is what happens when you let accountants [no offence ] analyse things people do for fun. What about Team-BHP drives? From accountant point of view that's a complete waste of time, effort and money. Bunch of cars drive to some meaningless destination and return. What about the time we all spend on Team-BHP? Can you imagine the loss of national productivity?

There are lots of stuff people do for fun, if you start putting money value on everything we do fun, it pretty much questions the meaning of life. Why waste money on expensive cusines and eating out when simple inexpensive food (dal/chawal/roti) can sustain us. Why eat icecream, what is the financial purpose of that?

The original post is helpful in the sense that one can decide whether a car purchase is affordable or not. But to say bigger powerful cars are waste of money even when you can afford it, is pushing it too much.

In other words, you can't put money value on everything you do. Remember, we earn money so that we can spend it on our needs, and then followed by our wants provided we have money left over.

Last edited by Samurai : 8th January 2006 at 11:25.
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Old 8th January 2006, 12:23   #25
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Well said Samurai. Though in all fairness, Minardi was merely pointing out the dollars and cents angle of car ownership, and he has made a point that we have not seen so far in this forum.

Your point is also very valid, and is the other side of the coin - the fun, enjoyment,etc. angle of car ownership.

More power to you both and to all of us.
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Old 8th January 2006, 15:20   #26
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When I was reading Samurai's post about eating ice-creams, I was actually eating ice-cream

I am in total agreement with Samurai, that if you have money, do enjoy!

My only point is double-check to ensure you don't have to pay a heavy price later on for your current enjoyment.

I really wonder, how many here have taken 5-year car loans and have paid up the 60 EMIs. Would really like to know them how they felt about paying up the later EMIs.

M
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Old 8th January 2006, 19:17   #27
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Very interesting points being bought out!...

Well, one point that needs to be considered when people are buying cars for the first time, they take two routes:
1. Buy a basic model first..800, alto, Santro etc and then graduate to a sedan.
2. Buy a sedan at once shot...
(the other option is buying a merc after winning a lottery...lets not consider that )

In most households, after a while:
If option 1 is followed: Mostly the first car would be passed on as a second car...so small car for city driving! (or for spouse ... ) and big car for laaaang drives....
If option 2 is followed: Buyer has already made up his decision to keep this car for quite some time...
So people are still not used to changing cars here every 2-3 years. This trend is slowly catching up...but still very few in number.

When these factors are considered, people look for long term trouble free experience and most of them dont want to jump to the used car route... So when you take the period for 5 years or 7 years for a car, then you will see that maintenance increases exponentially...from year 3/4 onwards (its year 7 for a used car)...so it may end up nullifying the benefits...

I would rather say, 2-3 years should be the ideal car loan duration...if you cant afford it...you shouldnt buy it !!
I must confess, the smell of a new car is worth an extra buck ... ...and a sense of pride!!!... (like mastercard says, PRICELESS!!!)...

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Old 9th January 2006, 15:12   #28
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Quote:
What about the time we all spend on Team-BHP? Can you imagine the loss of national productivity?
Shhhh.... please don't tell my boss about it.

Quote:
I really wonder, how many here have taken 5-year car loans and have paid up the 60 EMIs. Would really like to know them how they felt about paying up the later EMIs.
That's the point.

You see, people's preference and priority changes with time. I bought many gadgets on the fad and used them extensively for a short period of time. But nowadays I don't use them. However, small items don't make any trouble even if they gather dust. But for a car, even if you don't enjoy it as much, still the expenses you have to bear!

I think the point what Miranda tried to highlight is that, there is no harm if you can afford buying an expensive car. But it must not be a hasty decision - do whatever you want to do but after careful planning and calculation.

Just my 2 cents...

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Old 9th January 2006, 15:18   #29
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Quote:
Originally Posted by sbasak
I think the point what Miranda....
You meant Minardi right ?
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