If buying a car is a part of your financial goals, then provide for it through aggressive investment.
The Indian consumer has never had it so good. Gone are the days when you had just two choices -- either a Fiat or an Ambassador. Now you are spoilt for choice. With various international brands entering the market, there is no dearth of options. Car buying is also becoming cheaper due to launch of small cars by many players. In fact, by October this year, we are going to see the launch of the Tata Nano with a price of just Rs one lakh in the Indian market.
However, while cars are becoming cheaper, the fuel cost keep on going up. The crude oil has already touched $100. And there is news that the petroleum ministry is also likely to take the hard decision of hiking petrol and diesel prices soon. Obviously, buying the car is not job done but you also need to consider other costs like car running and maintenance costs. As a rule of thumb, the total expense on a car is divided between price of the car (one third) and operating costs (two third).
Let us understand this better with an example. Considering that you have a petrol car for Rs 500,000. This car gives a mileage of 10 kms per litre and you run it for 30 kms per day. Assuming that the cost of petrol to be Rs 50 per litre, the daily cost of running the car is Rs 150.
On a monthly basis, this translates into Rs 4,500 per month. Add to that several other expenses such as periodic servicing and maintenance, along with denting and painting for the little scratches and dents and there would another expenditure of Rs 10,000 a year. Then, there are average insurance costs of Rs 7,000 a year.
And finally, road taxes and registration charges could cost you another Rs 4,000-to Rs 5,000 a year. The grand total: Rs 75,000 a year. And if you want to be chauffeur-driven, then your expenses could go up to Rs.1,30,000 to Rs1,50,000 a year. And in a five year period, this expense will easily cross the price of the car itself.
Thus, given the high costs of running and maintaining a car, it would certainly help if you properly plan the total cost of purchasing a new car