ARTICLE: The real cost of car ownership

musicmanaman · 2nd September 2007, 19:43

The points mentioned by Carboy and SKS Biker in this tread are very usefull, I initially thought in the following way.

I travel for around Rs 4k by taxi's every month, and the Taxi's cost usually works out to about Rs 9-10 per Km, to add to that I don't have the convinence of travelling anytime I want and the heat within the Taxi in summer months is too much, I though that even if owning a car cost me Rs 9-10 per km, atleast I have a whole lot of added benifits.

I though I'm very wise and opted to buy a cheap car, came across a 99 carb zen which looked good and the general perseption was that Zen gives good mileage, so I picked the same up.

Now when I work out the running cost per Km and only take Fuel and Maintanence it still works out to Rs 9-10 per km, BUT when I add the downpayment, the transfer charges, the pending tax, the fuel, the maintanence, the parking, etc, etc, my cost works out to Rs 25+ per Km, now this will keep coming down with the more Kms I drive, but I'll have to really drive a lot for it to come down and also keep the car and not sell it.

One thing I have got good at after owning a car is perparing exl sheets to work out cost, and to add to the above if I sell the car today I will run a loss of about 1.2 lakhs without fuel and about 1.5+ with fuel.

Lesson learnt is owning a car is not cheap and fuel and the average that a car returns are a very minor part of the total ownership cost, but unfortunately average is the only part we all seem to work on when buying a car.

DieselFan · 2nd September 2007, 20:08

Musicmanaman - I am not sure about your mathematics. On a long term ownership buying a car is more economical than renting out the car. On buying a car and running it for at least 5 years one will not spend more than 10-12 RS. a KM (Here my asumption is that the car is a C Segment car). The assumption also is that you use the car for more than a 1000 km a month. If you use the car for less than 1000 KM a month than the cost per KM increases. TCO will exceed 25 Rs. a Km if you run the car 300 KM a month which is less than 10 KM a day.

musicmanaman · 2nd September 2007, 20:25

DieselFan - I agree with your comments and the more I drive the more the cost comes down, and from where I stand right now, I'll sure have to drive a lot for the cost per Km to come down. My usage has been about 20 km's per day and about 600-650 km's in a month in the last 10 monts that I have owned the 99 Carb zen.

The lesson learnt by me for me is buy a cheap car and drive it as much as possible, and it's best to buy outright if one can.

I would have been in a much better position had I bought a 97 carb 800 which I was getting at 65k and drove it as much as possible, because then I would not have bouthered about the 5+k EMI that I'm paying.

guyonblackybx · 2nd September 2007, 20:49

Hi GTO,

This article is an eye opener

Thx for sharing
Naveen

chawrevakil · 23rd January 2008, 02:07

Friends, car is no more a need, basically. It is your emotional need, like rightly said entertainment etc. And if you strive for comfort, you have to pay for it. Taxis are not availbale just under your apartment, you must walk down for a while, at least. May not be so with your car. And, if you or your near one falls ill suddenly and you need to go to the doctor / hospital at 2 o'clock midnight, and then, if you don't get taxi, and, may almighty forbid, a life is lost, what is the cost ?

All things in life are not computed in terms of money.

breezydrive · 9th September 2008, 13:08

Inspired by GTO’s thread on 5 year old car, i tried to work out how much the second car /upgrade will cost me over a period of 5 years.

See attachment below!

Certain assumptions were made:

1. OTR considered on tentative basis
2. Accessories cost varies as per individual's taste & vitamin M
3. Fuel consumption is based upon general perception & T-bhp's reviews
4. Average fuel cost for next 5 years depends upon various factors.
5. Service interval considered as 7000 km ( my taste)
6. Misc. repairs may involve suspension work, minor body repairs etc. but does not include accidental/ major repairs
7.Resale value - highly subjective ( Next five years shall witness plethora of cars being launched among all segments.These cars would definitely boast of better features/ specs. than the current crop of cars. Hence faster rate of dep. for current lot. Brand value ( Hondas etc.) as always shall have major bearing on resale value )

Now, 22 lacs savings seems worth ( at least for me) & may be i should invest in another property, keep the old car for daily running & hire a cab/ SUV/ Limo ocassionaly (as the occasion demands)

anujmishra · 9th September 2008, 15:22

I feel there are some hypothetical data has been used. Like SX4 Vxi resale value is below 2 lakh. Even you cannot find good small car from Maruti 5 years old below 2 lakh.

Anyway, its nice data representation.

yvajit · 13th August 2009, 11:03

I am Ajit from Bengaluru and got hooked onto TEAM-BHP when I wanted to change the car tyres for my SANTRO. I never knew the amount of info that can be available for just car tyres! And reading all the 23 pages of the 32 pages @ 1 in the morning.Thats when I knew I am hooked to this site! :-)

And as a welcome gift, I present to the BHPians a file that would probably help in getting a reality picture of the financials involved!

Hope it helps!

Adios till next time..
@J!T

honeybee · 12th April 2010, 11:23

This is an old thread, but I couldn't avoid posting one point in favour of owning a car. I have gone through an earlier post that refers to an article which says selling off your car is the best way to save on expenses. But if you use the car on outstation travels, you are actually saving money.

Most of us have parents or small kids whom we do not want to take by the railways, with so many hassles involved. There are reservations to be made in advance, bridges to be climbed up/down, carrying of all the luggage and making sure you don't lose your kids in the chaos. Naturally we prefer to go by our own hired vehicle. The going rate today is around Rs. 8/- per kilometre. If you have your own vehicle and drive it yourself, you would end up spending less than half that money on the fuel. Even if you hired a driver, the whole deal works out to be much cheaper.

A recent example: We concluded a 780 km trip in two days. We were four people with good amount of luggage. We went by our Santro and spent around Rs. 2000 on petrol. If we had hired a vehicle, it would cost Rs. 8/- per km, which works out to Rs. 6240/- Add to that another Rs. 500/- as night charge and tip to the driver and you are looking at something just under Rs. 7000/-. Net savings of approximately Rs. 4-5K. If I make five such trips in a year, I am easily saving close to 30K. Toll and other charges are not included because in any case you have to pay them.

Drivers are available at Rs. 250-300/- per day for single day journeys, for extended journeys the rate would be a little higher, including night charges. Even then you would be only spending about Rs. 400/- extra per day.

While going to the airport, or going to Pune, the tourist vehicles charge you a lumpsum amount instead of per kilometre. From our town to the airport, the going rate is Rs. 1200/- or more. In my own car it costs less than Rs. 400/- including toll. For Pune trip for a day, it would be upwards of Rs. 2000/-, which again I can do for Rs. 700/- including toll. Each such trip saves me upwards of Rs. 700/-

About six trips to the airport, about 15 to Pune and about five long journeys outstation save me approximately Rs. 40000/- And I drive a petrol car. If you had a diesel, you would be saving much more. To cite another example, I was able to save almost 40-50% of fuel cost on a round trip to Solapur in a diesel Indica as compared to my M800 (5 speed MPFI).

GTO · 12th April 2010, 19:02

Nice post, Honeybee. Are you saying that you support the cause of car ownership (versus renting)? Well, HELLO, you are in the midst of diehard petrolheads. I'm sure 99.99% of everyone reading your post will agree with you

Rahulk76 · 12th April 2010, 23:08

Classical case: I have saved enough so that i can write off the car loan..

Is it worth writing off the car loan @10%from SBI?
Is it worth paying 50% of loan as prepayment ?
Do nothing and reinvest that money ?

Thnx

ridinthru' · 13th April 2010, 00:04

Rahulk76 - You would have to write off the car loan entirely or let it be, part payments are not allowed in car loans. Part payments are valid only on home loans.

Cheers
RD

Rahulk76 · 13th April 2010, 08:53

Quote:

Originally Posted by ridinthru'

Rahulk76 - You would have to write off the car loan entirely or let it be, part payments are not allowed in car loans. Part payments are valid only on home loans.

Cheers
RD

RD
the loan is from SBI and we can make part prepayments after one year.
Rahul

harjeev · 13th April 2010, 09:24

@Rahul
I agree. I have a car loan from Punjab & Sind Bank. I can deposit whatever amount I want in the Loan Account, yes its a loan account. And yes whatever amount. more or a little less they are not concerned. Though I have to pay the interest if I delay, but they are very flexible this way!!!

honeybee · 13th April 2010, 09:32

Quote:

Originally Posted by Rahulk76

Classical case: I have saved enough so that i can write off the car loan..

Is it worth writing off the car loan @10%from SBI?
Is it worth paying 50% of loan as prepayment ?
Do nothing and reinvest that money ?

Thnx

I am assuming that since you have saved enough, you earn regular (i.e. monthly) income. In this case it would never be a bad choice to pay off your loan. This way you will free up a considerable amount of your monthly income to invest in SIPs or mutual funds or anywhere else. Seek help from any friend who is good with finances, work out the liabilities in case you want to continue with the loan for the rest of the term. My guess is paying off the loan should work to your advantage any time, but figures will give you a clear picture.

2nd September 2007, 19:43	#31
musicmanaman BHPian Join Date: Nov 2006 Location: kolkata Posts: 927 Thanked: 25 Times	The points mentioned by Carboy and SKS Biker in this tread are very usefull, I initially thought in the following way. I travel for around Rs 4k by taxi's every month, and the Taxi's cost usually works out to about Rs 9-10 per Km, to add to that I don't have the convinence of travelling anytime I want and the heat within the Taxi in summer months is too much, I though that even if owning a car cost me Rs 9-10 per km, atleast I have a whole lot of added benifits. I though I'm very wise and opted to buy a cheap car, came across a 99 carb zen which looked good and the general perseption was that Zen gives good mileage, so I picked the same up. Now when I work out the running cost per Km and only take Fuel and Maintanence it still works out to Rs 9-10 per km, BUT when I add the downpayment, the transfer charges, the pending tax, the fuel, the maintanence, the parking, etc, etc, my cost works out to Rs 25+ per Km, now this will keep coming down with the more Kms I drive, but I'll have to really drive a lot for it to come down and also keep the car and not sell it. One thing I have got good at after owning a car is perparing exl sheets to work out cost, and to add to the above if I sell the car today I will run a loss of about 1.2 lakhs without fuel and about 1.5+ with fuel. Lesson learnt is owning a car is not cheap and fuel and the average that a car returns are a very minor part of the total ownership cost, but unfortunately average is the only part we all seem to work on when buying a car. Last edited by musicmanaman : 2nd September 2007 at 19:47.
	() Thanks

2nd September 2007, 20:08	#32
DieselFan Senior - BHPian Join Date: Mar 2007 Location: Bangalore Posts: 1,584 Thanked: 260 Times	Musicmanaman - I am not sure about your mathematics. On a long term ownership buying a car is more economical than renting out the car. On buying a car and running it for at least 5 years one will not spend more than 10-12 RS. a KM (Here my asumption is that the car is a C Segment car). The assumption also is that you use the car for more than a 1000 km a month. If you use the car for less than 1000 KM a month than the cost per KM increases. TCO will exceed 25 Rs. a Km if you run the car 300 KM a month which is less than 10 KM a day.
	() Thanks

2nd September 2007, 20:25	#33
musicmanaman BHPian Join Date: Nov 2006 Location: kolkata Posts: 927 Thanked: 25 Times	DieselFan - I agree with your comments and the more I drive the more the cost comes down, and from where I stand right now, I'll sure have to drive a lot for the cost per Km to come down. My usage has been about 20 km's per day and about 600-650 km's in a month in the last 10 monts that I have owned the 99 Carb zen. The lesson learnt by me for me is buy a cheap car and drive it as much as possible, and it's best to buy outright if one can. I would have been in a much better position had I bought a 97 carb 800 which I was getting at 65k and drove it as much as possible, because then I would not have bouthered about the 5+k EMI that I'm paying.
	() Thanks

2nd September 2007, 20:49	#34
guyonblackybx BHPian Join Date: Sep 2007 Location: Hyderabad Posts: 366 Thanked: 14 Times View My Garage	Hi GTO, This article is an eye opener Thx for sharing Naveen
	() Thanks

23rd January 2008, 02:07	#35
chawrevakil Newbie Join Date: Jan 2008 Location: Aurangabad Posts: 8 Thanked: 0 Times	Friends, car is no more a need, basically. It is your emotional need, like rightly said entertainment etc. And if you strive for comfort, you have to pay for it. Taxis are not availbale just under your apartment, you must walk down for a while, at least. May not be so with your car. And, if you or your near one falls ill suddenly and you need to go to the doctor / hospital at 2 o'clock midnight, and then, if you don't get taxi, and, may almighty forbid, a life is lost, what is the cost ? All things in life are not computed in terms of money.
	() Thanks

9th September 2008, 15:22	#37
anujmishra Senior - BHPian Join Date: Jun 2008 Location: Bangalore Posts: 1,293 Thanked: 529 Times View My Garage	I feel there are some hypothetical data has been used. Like SX4 Vxi resale value is below 2 lakh. Even you cannot find good small car from Maruti 5 years old below 2 lakh. Anyway, its nice data representation.
	() Thanks

12th April 2010, 11:23	#39
honeybee Senior - BHPian Join Date: Apr 2008 Location: Dombivli Posts: 3,055 Thanked: 2,144 Times View My Garage	This is an old thread, but I couldn't avoid posting one point in favour of owning a car. I have gone through an earlier post that refers to an article which says selling off your car is the best way to save on expenses. But if you use the car on outstation travels, you are actually saving money. Most of us have parents or small kids whom we do not want to take by the railways, with so many hassles involved. There are reservations to be made in advance, bridges to be climbed up/down, carrying of all the luggage and making sure you don't lose your kids in the chaos. Naturally we prefer to go by our own hired vehicle. The going rate today is around Rs. 8/- per kilometre. If you have your own vehicle and drive it yourself, you would end up spending less than half that money on the fuel. Even if you hired a driver, the whole deal works out to be much cheaper. A recent example: We concluded a 780 km trip in two days. We were four people with good amount of luggage. We went by our Santro and spent around Rs. 2000 on petrol. If we had hired a vehicle, it would cost Rs. 8/- per km, which works out to Rs. 6240/- Add to that another Rs. 500/- as night charge and tip to the driver and you are looking at something just under Rs. 7000/-. Net savings of approximately Rs. 4-5K. If I make five such trips in a year, I am easily saving close to 30K. Toll and other charges are not included because in any case you have to pay them. Drivers are available at Rs. 250-300/- per day for single day journeys, for extended journeys the rate would be a little higher, including night charges. Even then you would be only spending about Rs. 400/- extra per day. While going to the airport, or going to Pune, the tourist vehicles charge you a lumpsum amount instead of per kilometre. From our town to the airport, the going rate is Rs. 1200/- or more. In my own car it costs less than Rs. 400/- including toll. For Pune trip for a day, it would be upwards of Rs. 2000/-, which again I can do for Rs. 700/- including toll. Each such trip saves me upwards of Rs. 700/- About six trips to the airport, about 15 to Pune and about five long journeys outstation save me approximately Rs. 40000/- And I drive a petrol car. If you had a diesel, you would be saving much more. To cite another example, I was able to save almost 40-50% of fuel cost on a round trip to Solapur in a diesel Indica as compared to my M800 (5 speed MPFI). Last edited by honeybee : 12th April 2010 at 11:24.
	() Thanks

12th April 2010, 19:02	#40
GTO Team-BHP Support Join Date: Feb 2004 Location: Bombay Posts: 71,780 Thanked: 322,453 Times View My Garage	Nice post, Honeybee. Are you saying that you support the cause of car ownership (versus renting)? Well, HELLO, you are in the midst of diehard petrolheads. I'm sure 99.99% of everyone reading your post will agree with you
	() Thanks

12th April 2010, 23:08	#41
Rahulk76 Senior - BHPian Join Date: Sep 2005 Location: India Posts: 1,148 Thanked: 235 Times	write off the car loan.. Classical case: I have saved enough so that i can write off the car loan.. Is it worth writing off the car loan @10%from SBI? Is it worth paying 50% of loan as prepayment ? Do nothing and reinvest that money ? Thnx
	() Thanks

13th April 2010, 00:04	#42
ridinthru' BANNED Join Date: Jul 2009 Location: roaming Posts: 134 Thanked: 20 Times	Rahulk76 - You would have to write off the car loan entirely or let it be, part payments are not allowed in car loans. Part payments are valid only on home loans. Cheers RD
	() Thanks

13th April 2010, 09:24	#44
harjeev Senior - BHPian Join Date: May 2006 Location: New Delhi Posts: 1,900 Thanked: 296 Times View My Garage	@Rahul I agree. I have a car loan from Punjab & Sind Bank. I can deposit whatever amount I want in the Loan Account, yes its a loan account. And yes whatever amount. more or a little less they are not concerned. Though I have to pay the interest if I delay, but they are very flexible this way!!!
	() Thanks