Home Tech Buying a Car vs Using app-Based Cabs – A Relative Study

Buying a Car vs Using app-Based Cabs – A Relative Study

Buying a car vs using app

Buying a car was a straightforward decision a few years back if you could afford one. However, things have changed rapidly with the advent of ride-sharing apps. At the click of a button, you can get a cab at your doorstep and never worry about the maintenance of the vehicle.

You would not be the only one with a dilemma when it comes to buying a car or using app-based cabs. If you want to buy a car, you need to take care of the down payment and EMIs. You also would have to handle the expenses related to insurance, maintenance of the car and most importantly fuel costs. On the other hand, when it comes to app-based cabs, their surge in prices, unavailability of cabs at times, and refusal of drivers to go to your destination are some of the pain points.

Here is an analysis of the two to help you better decide. It does not require a lot of effort to know the running costs of a cab. You can visit the website of operators to get insights on that. However, the cost of owning a car has a few additional factors.

Owning A Car

The cost of ownership would vary massively based on your usage, driving style, and vehicle maintenance. However, to make matters easy, we are opting for a conservative calculation.

  • Buying a Car:

    Let’s consider that you opt for a hatchback that costs around INR 8 Lakhs. Assuming a down payment of INR 2.5 Lakhs, you would have to take a loan of INR 5.5 lakhs from a bank. For a standard tenure of 5 years and an interest rate of 8%, the EMI would be approximately INR 11,150. The total interest that you would pay to the bank would be approximately INR 1.2 Lakhs. Taking the total cost of buying the car to INR 9.2 Lakhs.

  • Running Cost:

    Given that fuel costs are skyrocketing currently, assuming an average of INR 100 per litre and that your hatchback gives an average mileage of 14 km per litre, across city and highway, the per kilometre cost is Rs 7.

    You also need to pay the insurance and yearly maintenance charges. If you are paying INR 7000 for yearly maintenance and INR 15,000 for premiums, factoring in a 10% increase in maintenance and a 5% hike in premiums, it turns out to be INR 43,000 approximately for maintenance and INR 83,000 for insurance for a 5 year period.

For a moderate distance of 20kms every day, your yearly expenses amount to INR 36,400 or INR 1.8 lakh for a 5 year period. And with annual holidays of 2000 km each year, it is INR 70,000. Bringing the total cost of ownership in 5 years to approximately 13 Lakhs. 

For ride-sharing apps, the average price is INR 18/km and the surge price of INR 40/km. For the above scenario, assuming you go to work at surge pricing, it will cost you INR 10.4 lakhs over 5 years. And for your weekend trips, it would cost you INR 1.8 lakhs. Thus, an approximate total of INR 12.2 lakhs.

A lot of assumptions have gone into the above calculations. However, it primarily depends on your needs whether you want to buy a car or opt for ride-sharing cabs.

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