In the age of Ola and Uber, more and more commuters are juggling with an important question—should I rent a car or buy one for myself?
We live in that kind of society, where buying a car is still the matter of envy for neighbours. After all, a car provides you with the mobility of travelling distances conveniently, and thus, gives you the feeling of being on top of the world. The achiever’s feeling that you get after driving a car may seem fantastic. Undeniably, owning a car is like a status quotient that gives you an edge over others.
However, given the costs associated with purchasing a car along with parking issues, many people shun the idea of spending their money on buying a car and thus, prefer to rely only on cabs when it comes to commuting from Point A to Point B.
But what’s the best decision for you? Undeniably, both the options have their benefits and shortcomings and what wins at last, depends on a person’s choice. So, let’s do some number crunching to decide what should be your course of action.
For Buying a Car
- Cost of a car= Rs 8 lakh (ex-showroom price)
- Initial down payment=Rs 3 lakh
- Total loan taken= Rs 5 lakh
- Interest rate of loan= 15%
- Tenure of Loan= 5 years (60 months)
- EMI per month= 11,895 ( x60=713700)
- Total Interest payable= Rs 2,13,698
- Average insurance cost= Rs 12,000/annually (12,000×5=60,000)
- Maintenance cost= Rs 15,000/annually (75,000 for 5 years)
- Assume a car gives 20 km/lt diesel (approximate average)
- Cost of diesel/km: Rs 60/20=Rs 3/km
- Average use of car by a person who uses it daily: 1500km/month
- Average fuel cost: Rs 3*1500*60= Rs 2,70,000
- Parking/miscellaneous charges: Rs 50,000/annually (5 years=Rs2,50,000)
- Total value of vehicle at 15% after five years= Rs 2,40,000 (approx.)
- Total cost of owning a vehicle=Rs 14,28,700
(3,00,000+713700+2,50,000+2,70,000+75,000+60,000)- 2,40,000)
Note: We have kept car insurance policy premium rates constant, which may vary as per the age of the car. Also, the number of kms driven in one month depends on the individual and thus, the costs may vary accordingly.
For renting a car
- Cost per km of rented car= Rs 20
- Average use in per month= 1,500 km
- Cost of renting a cab/month= Rs 30,000 (20×1500)
- Cost of renting a cab for five years= 18,00,000
Seems costly, right? If you invest the car loan EMI of Rs 10,000 (approx.) for 60 months, you will get Rs 9 lakh (approx.) if the rate of return is 15%.
Now true cost of renting a car= Rs 9,00,000 (18,00,000-9,00,000)
Moreover, you will also get a free driver.
Buying Vs. Renting a Car
| Buying a Car | Renting a Car |
| At your disposal, all the time. | It depends on the availability of cab service. |
| You can customize it as per your interest. | You can’t modify the car. |
| Need personal maintenance like washing, servicing, etc. | No need to worry about maintenance. |
| Much safer than cabs. | Safety is a concern. |
Our Analysis
It is clear from the above discussion that hiring a cab will be lighter on your pocket, however, there are some things which money can’t buy. Let’s find out what both can offer you=
If you own a car
- Ownership pride= Nothing compares to the pride of owning your own
- Hassle-free= When you have a car, you are free from the hassles of booking and waiting for the cab. Even a cab service which promises to reach at your doorstep in five minutes, can’t match the convenience which you can get when you own a car.
- Emergencies= Any emergency is easy to handle if you own a car. The same is true for impromptu holidays and weekend rush.
- Safety= With the rising incidences of misbehavior by drivers, it is safe to be behind the wheel, especially for females.
If you hire a car
- Efficient use of time= When someone else is driving a vehicle, you can use the time to catch up on your office mails and calls.
- Relaxed journey= Especially in metro cities, where traffic snarls become a nightmare, it is good not to drive a car, especially during peak hours or rainy season.
- No parking issue= In the congested lives of cities, it is difficult to find parking space, moreover, even if you are lucky to find the one, you would have to pay for it. A rented car frees you from such worries.
The Final Verdict
Whether you should buy a car or rent it, the decision should be based on your interests and travelling habits. Though, the feeling of buying a car fills you with excitement and passion, there’s a cost attached to it. Similarly, hiring a cab may look economical but it would not cater to your passion of driving. If driving is your passion, buy your own car, as you can’t put a tag on your happiness. But make sure it doesn’t affect your finances.
So, properly weigh all the pros and cons before making a final decision that is right for you and your family. However, in case you buy a car, don’t forget to cover it with a comprehensive car insurance, which will offer you financial coverage in case of any mishap.
