9 ways to use credit card properly!

Owning a brand new car has always been a matter of pride. But with the changing dynamics and increasing options millennials are shifting towards new choices like hiring a cab. With cab-availing services like Ola and Uber available in just 2-3 clicks, many of us get confused between buying a car vs hiring a cab.

Both the options come with their pros and cons like if you buy a car on loan, you have to think about the down payment and the EMIs. Plus, fuel costs that keep rising, insurance, and maintenance costs. And, the heavy traffic during the peak hours, makes driving a difficult task. With cab-availing services, factors like increasing pricing, cab refusal, increasing long-distance cost, etc. make it expensive.

Here we compare between buying a car and hiring through cab-availing services, to help you understand which is more cost-effective and beneficial considering your travel pattern.

Cost of Buying a car

Let us assume you have bought a base model Maruti Wagon R in Delhi that costs Rs 5,09,734 lakh. You have opted for a loan on it. You pay a down payment of Rs 1,09,734 and the rest 4 lakh through a loan. Then at the rate of 8% interest, your monthly EMI would be around Rs 8,111. Towards the end of 5 years, you pay Rs 5,96,734 for the car, including Rs 86,633 interest.

Now, if you travel 60 kilometers every day and your car gives the conservative average of 15kmpl with the current fuel price which is Rs. 90.5 your average cost comes to Rs 6 per km adding up to Rs 360 per day. So if you travel 2000 km in a month it will cost you Rs 12,000. Also, you have to give Rs 75,000 on an average towards maintenance and parking for five years. Besides you need to pay insurance of roughly around Rs 75,000 for these five years. On the five-year scale, it will add up to Rs.8.7  lakh.

The total cost after adding 5.96 lakh and 8.7 lakh comes to Rs 14.66 lakh. Also, if you want to sell your car after 5 yrs, the calculated depreciated value would be around Rs 2 lakh. So, the calculated cost for one day would be Rs 703 and for one month would be Rs 21,100 and the 5-year cost would be 12.66 Lakh.

For the distance of 30km, per day cost would be Rs 180 with the above-mentioned average and petrol price. So, in one month if the car travels for 900 Kms it will cost around Rs 5400. For one year this will sum up to Rs 64800 and for 5 yrs Rs 324,000. After adding Car cost, insurance, maintenance, travel cost, and reducing depreciation you will have to pay Rs 8,70,734 in five years.

Cost of hiring a cab:

If you select a Wagon R for your cab travel, an average Ola/Uber ride will cost around Rs 12 per km. And if you are travelling for the same distance of 60 km a day, per day cost comes around Rs 720. So, if you travel  2,000 km every month, you’d be spending Rs 24,000 per month and that, in 5 years, would be Rs 14.40 lakh.

If you calculate for the daily travel distance of 30km, per day cost comes around Rs 360 with Rs 12 per km. So, if you travel  900 km every month, you’d be spending Rs 10,800 per month and that, in 5 years, would be Rs Rs 6.48 lakh.

Looking at the cost calculations, hiring a cab is better for a shorter duration, and owning is better for long-distance travel. Also, a cab eases your parking worries and the traffic struggles as it also comes with a driver. But at the same time hiring a taxi is not reliable, you don’t get Ola/Uber across all locations in the city, especially if it’s a weekend or post 9 pm in the night. But you can travel anywhere anytime with utmost safety.

With the increasing cost and demand, there has been a huge surcharge for peak hour travel which eventually pulls a large chunk of the rider in cabs. But, if you have bought a car during the current covid-19 pandemic then you could be on the negative side as most offices have been working from home. So, you should now go for the option which suits best to your needs.