Hey guys
I wanted some advice on the financial aspects of buying a new car in today's world.
1. How to calculate a car budget that makes financial sense?
2. Loan Vs Cash payment
3. Any other smart ways to minimise the effective cost of ownership.
Looking forwards to some suggestions. Thanks
Buying a new car is more of a aspiration/show off than necessity.
Let's say you buy a 20L car. For new car you must add on rsa+engine cover+0 dep which will be min 40-50k/Yr.
Look at fuel price. You'll be spending at least 7-8rs/km just on fuel. Maintenance/service cost depends on brands. on an average consider 15k/yr for 10k running. Low for honda/toyota. High for german/korean. There is hardly any "service" in maruti/tata/mahindra.
Plus the emi. For long term loan, calculate how much you'll pay interest. If you later plan to pre close, there is preclosure fee.
As your car is your liability in case of accident. So you need to be careful of that. If you have 0 dep, then you have to pay only a small amount. But without it, you may have to pay significant amount from your pocket.
You'll wash your car atleast once a month. Might do detailing once a yearIf you do ppf, youll spend 1-1.5 L. Again for a small accident, you have to change ppf of whole part. Can't do patch work. FYI replacing ppf(paint protection film)cost you more than the paint it is supposed to protect. Might buy some accessories. All this won't be covered in insurance.
Let's say you use it for 10yrs. So 2LPa depreciation. If you sell off after few years, depreciation will be higher.
So just a basic calculation, your fixed cost of buying a car will be around 3LPA, variable cost depends on usage. But would be around 1Lpa .
But the worst part is when your brand new car will be hit by some drunken idiot, You ll send your car to workshop. It could be weeks before you get that car, during that time you are still paying fixed cost like emi and insurance etc.
We also don't know what will happen to ic cars. How much new restrictions/tax will govt impose on it.
So unless you have high running (20k/year), it makes no sense to buy a brand new cars. Buy a 2nd hand honda/toyota/ford. Its safe, reliable, affordable, good service.