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Old 14th November 2009, 18:11   #256
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Originally Posted by GTO View Post
Certainly yes. It has been mentioned that business owners / corporates must factor in depreciation benefits to the calculations in my opening post. Note however, that the actual benefit to you is not the entire depreciation claimed. It is 30 - 35% (your income tax bracket) of the total depreciation. As an example, say on a 10 lakh rupee Cruze, you claim Rs. 2.0 lakhs of depreciation in the first year. The actual benefit is not the entire 2.0 lakh rupees, rather Rs. 60,000. Simply because if you hadn't claimed depreciation, that amount would be taxed @ 30%. The balance 1.4 lakhs would still be your after-profit $$$.
Thanks for the clarification especially about the savings of 1.4 lakhs if we do not claim depreciation in the first place. I am a dud in maths.
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Old 18th November 2009, 01:12   #257
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My first post here, but I have been an avid reader gleaning knowledge from members here on the Indian Car Market.

I am in the camp, which believes in the used car market. Returning to India after a gap of 15 years I was shocked at the price dislocation for cars here vs. the US. A Honda CRV for Rs. 26+ lakhs OTR Mumbai totally blows my mind (in the wrong way!).

Over the past 8 months I have ended up acquiring a 2007 CRV and a 2008 Civic for less than the cost of a new CRV and I am very happy with the acquisitions. Took me a while to find the right car at the right price but the amount of legwork I put in paid off in the end.

Agree with GTO on some of his points. Let someone else take the depreciation (I ended up paying 45% less for the CRV and 35% less for the civic vs a new one) and even if you end up selling it after 5 years despite GTO's logic you won't take as big a hit as you would have had you bought your car new.

Those crying about the lack of new car smell in a used car - Get a good detailer. I used Kamyo for both my cars and they did a great job. Jehangir is a detail oriented guy and I would certainly recommend him.
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Old 18th November 2009, 16:29   #258
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Firstly, thats a great choice of nick! What you see is what you get, eh?

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Over the past 8 months I have ended up acquiring a 2007 CRV and a 2008 Civic for less than the cost of a new CRV
Quote:
Let someone else take the depreciation (I ended up paying 45% less for the CRV and 35% less for the civic vs a new one)
A 2007 CRV has at the least 10 - 15 years of smooth reliable life in her. Thus, you bought a car that was used only for 15% in total, but at nearly half the cost. That's value !

And the Civic, have a blast high-revving her. She has one heck of a balanced chassis + engine + gearbox + steering combination. I see you are from Bombay. Driven down an empty Lonavla ghat lately?

Quote:
even if you end up selling it after 5 years despite GTO's logic you won't take as big a hit as you would have had you bought your car new.
Very true. If you've bought used, sure, go ahead and sell in 5 years. But selling a car that was brought new, in only 5 years, is a BIG NO NO!

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Those crying about the lack of new car smell in a used car - Get a good detailer.
Well said.
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Old 19th November 2009, 22:41   #259
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Firstly, thats a great choice of nick! What you see is what you get, eh?
+1 to that. Nic catch BTW.

Now coming back to the topic, my Oct 2004 WagonR LXi has done 62k kms and the loan just got over last month. Gotta love the EMI-free period. Last week I took it for the 60k service and the estimate handed to me by the SA was shocking (but not entirely unexpected). He wrote approx Rs. 30,000 which included both axles, steering overhaul, brake disc replacement, cambers, etc etc. That is the result of the smashing it took on the Raid de Himalaya three years ago. I have known some of the issues for about six months now but have ignored because of the low running it does (300-400 km/month).

Now I have two options:

1. Keep the car and spend the moolah (well I've had the crazy thought of getting it back in factory condition by scraping it clean to the metal and getting it painted afresh after completing these repairs, add new bumpers, fog lamps, etc etc) - Total approx damage - Rs. 70K (well I think so) (Note: This is the first car I bought with my own money)

2. Sell the car and take whatever I can get - approx Rs. 1.25 lakhs (am I too optimistic??). Use this to pay the DP and pick up an i10 kappa magna. I love the Ritz petrol but simply hate the way it looks. And that when I haven't grown any fonder of the way my WagonR looks even after 5 years.

Please help me make the right decision.

Last edited by Technocrat : 20th November 2009 at 18:00. Reason: fixed quote
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Old 20th November 2009, 00:53   #260
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Quote:
Originally Posted by shankar.balan
I am told the Maruti engines are good for 150,000 kms plus so with a little overhauling the Swift should serve you peacefully for another year or two!
Told by whom ? And after a year or two, the car will disintegrate ?
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Old 20th November 2009, 01:39   #261
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Quote:
Originally Posted by GTO View Post
Firstly, thats a great choice of nick! What you see is what you get, eh?
Thanks
Ventured into the ghats earlier this year in the monsoons in the CRV tho.
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Old 20th November 2009, 11:35   #262
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Originally Posted by drpullockaran View Post
Thanks for the clarification especially about the savings of 1.4 lakhs if we do not claim depreciation in the first place. I am a dud in maths.
I think depreciation is an over-rated thing, you actually spen more money than the tax saving (which makes you think that you have gained in the whole transaction). It is ok if you need a car but changing cars just to claim depreciation does not make financial sense(not taking in to account social and esteem needs)
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Old 20th November 2009, 17:52   #263
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Quote:
Originally Posted by drpullockaran View Post
Thanks for the clarification especially about the savings of 1.4 lakhs if we do not claim depreciation in the first place.
Hi Doc, just to clarify (in response to some PMs I've received from members). Say you buy a 10 lakh rupee car in your company's name and want to avail of depreciation benefits. Assuming that you are in the 30% income tax bracket

FIRST YEAR:

10,00,000 = Cost of car

1,50,000 = 15% depreciation allowed in the first year. You will show this as a cost (and thus, your taxable income will come down by 1,50,000)

45,000 = Actual benefit & 30% (your income tax bracket) of the 1,50,000 depreciation claimed. Simply put, this is the amount you have saved by taking the 15% depreciation as a cost.

SECOND YEAR

The calculation for the second year will be the same. Only difference. Instead of 10,00,000 (original cost of car), we will start with the depreciated value which is 8.5 lakhs. Thus:

8,50,000 = Original cost of car LESS 1,50,000 that you have already claimed in the previous year.

1,27,500 = 15% depreciation of 8.5 lakhs. You will show this as a cost (and thus, your taxable income will come down by an equivalent amount).

38,250 = Actual benefit & 30% (your income tax bracket) of the 1,27,500 depreciation claimed. Simply put, this is the amount you have saved by taking the 15% depreciation as a cost.

The cycle continues over the next couple of years.
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Old 9th January 2010, 13:04   #264
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Quote:
Originally Posted by nkapoor777 View Post
+1 to that. Nic catch BTW.

Now coming back to the topic, my Oct 2004 WagonR LXi has done 62k kms and the loan just got over last month. Gotta love the EMI-free period. Last week I took it for the 60k service and the estimate handed to me by the SA was shocking (but not entirely unexpected). He wrote approx Rs. 30,000 which included both axles, steering overhaul, brake disc replacement, cambers, etc etc. That is the result of the smashing it took on the Raid de Himalaya three years ago. I have known some of the issues for about six months now but have ignored because of the low running it does (300-400 km/month).

Now I have two options:

1. Keep the car and spend the moolah (well I've had the crazy thought of getting it back in factory condition by scraping it clean to the metal and getting it painted afresh after completing these repairs, add new bumpers, fog lamps, etc etc) - Total approx damage - Rs. 70K (well I think so) (Note: This is the first car I bought with my own money)

2. Sell the car and take whatever I can get - approx Rs. 1.25 lakhs (am I too optimistic??). Use this to pay the DP and pick up an i10 kappa magna. I love the Ritz petrol but simply hate the way it looks. And that when I haven't grown any fonder of the way my WagonR looks even after 5 years.

Please help me make the right decision.
Hello,
I don't know if you have made the choice to repair your car by now but i would like to put forward some points to consider.

Keep the car only if you are fond of it and have decided that it is what you want to have say for the next 3 years atleast.

Shelling out 70K is like paying a EMI of around 5500 Rs for around a year's time.If you are able to sell of your car for say atleast around 1 Lacs then the balance you have to pay for you i10 would be around 30000 Rs.So you need to consider how much EMI you will be paying for the balance for around say 3 years.If it's around the 5500 mark it will be better to sell it off and get a new one.You also need to consider old car will have in general more maintainace than a new one.

Last edited by sumeethaldankar : 9th January 2010 at 13:06.
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Old 16th January 2010, 22:16   #265
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My Car (2005 Getz GLS) is nearing 5 years, no EMI etc and I am thinking along the same lines as the topic of this thread. I was thinking of replacing it with a new car in the second of this year. My preference is a modern & powerful hatch like VW Polo, but i am disappointed to find all the new and recent launches sporting 1.2 engines. So I am thinking if i could mod my Getz to enhance performance. I have not heard much about Getz mods, so I would like to ask the guys here if Getz is a modification friendly car and if it is advisable to modify it?
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Old 17th January 2010, 17:35   #266
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Welcome to the forum, Altius. The Getz isn't exactly a mod-friendly car, yet there are several threads on extracting the most performance / after-market enhancements for the Getz 1.3. Please search the forum. You might also want to use search tips from here for the best results.

Last edited by GTO : 17th January 2010 at 17:36.
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Old 19th January 2010, 21:42   #267
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Default The other side of the upgrade:the chepest deal

The premise is the calculation for an upgrade (sale old car option). You bought a new car, used it for 5 years (for approx 50k km) and sold it for an upgrade with all considerations brought out by GTO. I'll give the perspective of the guy who buys your old car, that's me. Here's the actual experience.
I bought a second hand Esteem (10 years old) with only 69K km, driven only in city and in very good condition, for 1 Lakh. So the car was valued far lesser than sticker price of 5.5 Lakh for the seller but worth much more in usable value left for the buyer.
My expenses till date:
Purchase plus minor expense (seat covers, audio etc): 110,000/-
Loan EMI: Nil
Maintenance: ~20,000 per year (have spent 70,000/- over 3.5 years)
Usage: ~10,000 km per year (have logged 26,000 km so far, odo now 95K km)
Utility left: ~55K km (considering 150K of fall apart life) i.e. around 5 years
Maintenance due in 5 years: approx 100,000/-
Running cost: 4.8 Lakh (~5.9 Rs per km given average FE of 11 kmpl over ownership life at average 65 Rs per Ltr of petrol over ownership period of 81 K km, *figures exaggerated to more expensive side)
Total: 1.1 + 0.7 + 1.0 = 2.8 (not adding running cost here)
Considering the first owner paid ~ 6L for the car (5.5 price + 0.5 maintenance) to drive 69 K km and I pay 2.8 L to drive 81 K km, who's got the runaway deal? So back to GTO's point, what is the viability for the seller?
I'll give a counterpoint to this next...please provide your views.
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Old 19th January 2010, 23:17   #268
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I had bought a new Maruti in 1996 and it served well, for the last 14 years for 95k km., it served well, now also it is working well. I had watched many new cars enter but due to other commitment postponed the car decision.
By the same logic of some members that financially, Second hand cars make sense, I started searching Old Toyota or NHC, but the price quoted for 2-3 years was 5-6 lakhs with inherent risk in second hand cars. (One Corolla with 25 k on odo, i had nearly finalised but later found that it had front accident). Though my usage is not much 5000 km/year.
In my case buying old car for 5-6 lakh did not make sense but paid 9 lakh for ANHC for peace of mind and joy, and I am planning to keep the car for next 10 years.
So If planning to keep new car for 10 years, buying second hand does not make sense.
Agree with GTO's logic, modern cars have a lot of life after 3-4 years, and our typical Indian usage, we hardly consume their life unlike US where in 3-4 years they use 2 lakh km.
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Old 20th January 2010, 13:33   #269
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I agree with you there bullock-car. Unless you are planning to hold on to a car for over 5-6 years it doesnt make too much of sense going in for a new one.
My Dad's 800 is a 96 too and it has done about 50K kms only so instead of replacing it we got another car (more for comfort and space).
My Ikon too is about to complete 5 years and has done 45K kms only, so though I had the itch to change it as all my friends have upgraded to higher segment vehicles, I decided otherwise. My car has never let me down and never asked for anything more than a service at 10K kms so even If I have to spend 50K on it once it crosses 50K kms I wouldnt think twice.

Once the EMI's end (4 months to go) I plan to continue putting aside the same amount as a car fund. I dont want to take the next car on loan and hopefully get a good pre owned one whenever I get it.
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Old 20th January 2010, 13:55   #270
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BHPins: Happy to find the right thread and discussion at the right time.

From 2006 I have been happily using a used car (Maruti Zen 2001 Aug LX model) in stock condition and I feel that the car had been (and have been) maintained very well. It was my first car and I really share some happy moments with her and also she hasnt let us down not even once in all the past 4 years.

On the recent christmas holidays, unfortunately, I was feeling the preassure of upgradation as the car was running out of space inside and people in the back had to share the space with the luggage (thanks to the new member in my family, cute little Abhi) and I really felt terribly uncomfortable about the ride. From that moment started searching for a used car (Sedans preferably SX4/Baleno [due to the excellent maruti service experience and the time I share with Suraksha Car Care Centre in Bangalore - I even called Lokesh - my friend in Suraksha - on my vacation to let me know if such a car comes in his vicinity] or a Honda City (NHC / ZX variants).

Came back from holidays and started searching on internet, dealers, honda shorooms for the one, but wasnt happy about any (poorly maintened cars - all of them - and asking price was much high). Finally found one and booked it, and as far as I have seen her, she is just in her showroom condition with 14 K on the odo, ZX Variant, 2006 Dec model, Single Owner - directly from the owner, Scratchlessly maintained, using Shell Petrol and running on synthetic oil, with sony music system, key less entry and reverse camera and with the price I had finally came to terms (initial figure in mind for a used car and what I paid for this one had huge difference - BTW). I have paid half the amount and just waiting for the process to be over and take her home!

Today happened to be the day when I have to part with my Zen Lady as well :-( and I managed to get a descent deal (Thanks to Lokesh at Suraksha Car Care - the car has been recommended to the relative of the centre in charge). I feel good about that aspect and also feel that a descent deal has been made. Only that from today till I take my new ride home, I am 'CARLESS'!!

Coming to the topic of discussion - I certainly agree with the points discussed about typical upgradation between 3 to 5 years, the depreciation related 'loss' we incur, and the EMI related lock periods and the commitments aspects with that to the banks. In my opinions, few people who are benefitted with the 'upgradation' are New Car / Used Car dealers, Banks, Car Accessory shops, and Lease Firms. If we can avoid any or all of them, then the impact of this movement and the loss the upgradation brings to the table could be reduced. Also, in my opinion, if the movement is towards a 'used car' that would also reduce the impact to a larger extent - only that we have to wait for the right moment and the right car for you!

In my case, my initial car and the latest NHC ZX does not carry any EMI with me, and did not come through dealers. I feel that hence the upgradation related impact with me is minimal compared to the case if I had upgraded to a 'NEW CAR in C-SEGMENT or ANY NEW CAR'

Thanks and Regards,
narayanang76
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