Diwali offers on new cars: Should you go for them?
Ahead of another Diwali, car makers are jostling for your attention once again. Its raining assured cashbacks, gold coins, special offers, corporate discounts, and cheap financing options. These offers are tempting, convincing and perhaps irresistible as well, but before you buy a car, do consider three important aspects, experts tell DNA Money.
Total cost of ownership — For anybody considering purchasing a car, the total cost of ownership includes maintenance, garage, parking and incidental costs, apart from car loan EMI and fuel cost. “So a car is affordable to you only if its maintenance and fuel expenses are not going to disturb your overall financial plan and budget for other life goals like retirement planning or children’s future,” says Vishwajeet Parashar – group head marketing, Bajaj Capital.
A three-year car loan EMI at most banks will cost you about Rs 14,000-15,000 a month for Rs 4.5 lakh loan if you make Rs 1 lakh upfront payment. Spare another Rs 3,000-5,000 per month for garage. If you don’t know driving, include paid driver costs for at least 6-12 months at Rs 50-100 per hour.
“Cars under city conditions and A/C use do not give more than 12-14 kmpl mileage. Fuel cost will be Rs 8,000-9,000 a month. Parking in public spaces can cost another Rs 3,000 per month assuming you pay Rs 100 for eight hours a day. Maintenance and insurance costs will also add to the bill. At the end of the first year, you will be spending about Rs 28,000-30,000 a month,” points out Anil Rego, CEO, Right Horizons.
Should you own a car — cars are necessity for people who can afford them. “The total cost of ownership of a car includes maintenance, garage, parking and incidental costs, and fuel expenses. These add up to much more than just the on-road price of a car. However, this inflationary trend is not restricted to cars alone, but applies equally to other forms of transport be it cabs or bikes,” says Navin Chandani , chief business development officer, Bankbazaar.com.
If you drive more than a certain number of kilometers a day, then it makes sense for you to buy a car. “Apart from the financial aspect, you will also have to factor in things like what time of the day you drive or your need of the vehicle. If you travel at odd hours, a vehicle may make more sense than taking a cab,” says Chandani.
Usually around occasions like Diwali is when car companies offer deals to car buyers. “The deals are so well packaged that one lands up buying the next level of what he/she aimed to buy,” says Chitra Iyer, COO, HappynessFactory.in
Planning a car purchase is better than acting impulsively. Parashar of Bajaj Capital says if you can wait for couple of years, start SIP in some diversified equity mutual fund. “Then, you may reach a situation where you will be able to build a corpus and thus take no or small loan,” he remarks.
Car financing — You have two options today to buy a car. One, you fund it from your own money in your bank account second is you take a loan and pay the minimum you need to for the car. Buying a car with the loan is definitely the right way to go, says Iyer of HappynessFactory.in .
If you plan to buy a car worth Rs 10 lakh, you pay 15-20% from your pocket and the rest can be funded by the loan company. You then pay an EMI on the loan which currently is around 9-10% per annum for a period of five years.
Car companies offer cheaper financing options, but study the fine-print carefully before jumping in. Take a three-year loan, instead of longer tenures to avoid higher interest outgo.
Also, the buyback deals being offered today are great to buy bigger cars. “When you can order an Uber or an Ola today at your doorstep to reach you to your destination which is your basic need, buying a car has become a comfort asset you can decide to buy based on your cash flow and your convenience, says Iyer. So, do the math and decide.
Source by dnaindia..