The normal question you expect to find in a personal finance website is ‘Decide on how to fund your car’..but let us go one step behind!
In the last 6 months I have seen 3 kids getting a Nano to go to college. Luxury or Necessity? No comments. Reality.
I have seen a person earning Rs. 400,000 gross buying a car. Father is a retired banker living on a pension and is the owner of the house. Son does not pay for food or board, but parents are THRILLED that their son has a vehicle 🙂
Before passing a value judgement, just think…DO YOU NEED A CAR?
How easy is it to get by using the public transport – at least in Indian cities it is NOT IMPOSSIBLE, but yes not easy either. In many Indian cities like Mumbai, Delhi, Chennai and Kolkatta public transport is subsidized. This means the cost comparison between a private transport and public transport is a completely unnecessary exercise to know which is cheaper. For example a railway pass (first class) costs less than the PARKING charges …especially taken on a monthly basis.
Also buying a car may not cut down your other expenses on auto, bus, etc. because your spouse, children, parents may still be travelling independent of your travel. Similarly you may take the car to office, and during that period the car is not really available to your family. Understand and appreciate all this before you take the plunge.
What are the factors that you SHOULD consider BEFORE you buy a car:
a) is there a public transport available without much inconvenience? In bigger cities you are likely to have a bus/train service which can be used for reaching your office. Or you can use the public transport from your home to a station near the office and then take an auto/taxi to your office.
b) how much is the distance: if your office is 8-10 km away and the road is easy to drive, it may make sense to drive down. However if it is 39km one way..driving in city traffic is not going to be easy.
c) remember fuel prices in India is determined by the government – so the taxes, $ rate, international prices, inefficiencies of the public sector distributors,…all get built into the price, so be careful. If a 10% increase in fuel costs will hit you, do not buy a car.
d) seriously consider a 2 wheeler before you buy a car…
e) will your spouse drive/ does she work in the same vicinity
The sad part is our public transport is so subsidized that there is NO WAY how a car can be more economical. Hence not including some such calculator, but hey Google has them, check it out!
Also when you see the price of a car and do consider the EMI please consider insurance, fuel, fines(!), cleaning, maintenance, parking charges when you go out, parking space cost in the residence, at the office,etc….
And hey consider the second hand option too 🙂
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