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    Cost of Ownership of Car in India

    With so many varieties of cars available in the market, it has now become much easier for the car lovers to own a car. Right from budget-friendly family cars to affordable sedans, the car manufacturers are rolling out plenty of low-priced car models every new month alluring people to secure a car of their own. The low-cost cars have actually changed the car buying scenario in India with more and more people securing a car of their own. While this option has actually opened up ways for people belonging to multiple economic strata to make their car buying dream come true, there are several other factors that need to be considered while buying a car.

    Among the several vital factors, the cost of ownership of a car is one major area that should be seriously pondered upon. While for most of the people, the purchase price of a car is its real cost, the actual scenario is completely different.

    What is Car Ownership Cost?

    While buying a car, after finalising the budget and the desired car, the next important step is to calculate the actual cost of ownership of the vehicle. The purchase price of a car isn’t the real cost of owning it as in the long run, there will be a number of additional costs and expenses that the owner will have to probably incur. For example, if you are planning to purchase a car by investing Rs.5 lakh, this is not the only expense that you have to make for the car. In the coming 5 to 10 years, several other expenses including the registration tax, road tax, car insurance premium, car loan EMIs (if you have taken any), monthly fuel expenses, car maintenance and servicing cost will get added to the list.

    However, it is not possible to calculate the cost of ownership of a vehicle accurately as most of the expenses are not pre-fixed. Anyway, it is not necessary to have an accurate figure, a rough estimate of the additional expenses will be sufficient to decide the real cost of ownership. In order to get a rough estimate of the real ownership cost, calculate all the above-mentioned costs and charges.

    Components of Car Ownership Cost

    As mentioned earlier, car ownership cost is not only the price of the car, but there are various other factors or components which comprise the actual car ownership cost. The ownership cost of a car depends on various factors which are detailed here:

    Purchase cost- The purchase cost of a car is the on-road price that the buyer pays to buy the car. This purchase cost or upfront cost of car purchase is the net on-road price of the car fixed by the car dealer after giving all discounts. Though this cost is usually thought to be the only cost of owning a car, this is actually just one among the various components of the cost of car ownership.

    Cost of accessories- Once you buy a car you might feel to do some additional installations to improve its look and functionality. These additions may include upgradation of the existing music system, customisation with new body kits and alloy-wheels, or decoration of the interiors and the rear. The cost of these accessories that you install or buy for your car, will make a component of your car ownership cost.

    Miscellaneous cost- Though this cost is often not taken into consideration by the car owners, the miscellaneous costs unknowingly keep adding on to the budget of the car owner. These type of costs include the toll charges, car parking fees at the office complex, Metro Stations, parking tickets etc. Despite the fact that these expenses are not much, by the end of the year, the car owners end up paying a significant amount of money in the form of such expenses.

    Depreciation cost- Buying a car is not an investment rather it is an asset as the value of a car depreciates over time. Immediately after buying a car when you drive it off the showroom, the car lost 10% of its value right at that very moment. After that with every passing year, the car’s value depreciate with around 30% to 40% depreciation taking place in the first year of purchase itself.

    Fuel cost- During the ownership of a car, one of the basic expenses that the car owner have to bear is that of the fuel. Whether you are owning a petrol or a diesel car, the fuel cost is something that a car owner should budget and include in the budget list right from the beginning. The cost of fuel in India is ever-rising and the cost of diesel and petrol can actually burn a hole in the pocket of the car owner. Only the cost of fuel, especially, the cost of petrol can equal to the EMI payment that you make every month.

    Insurance cost- Car insurance is a mandatory thing that every car owner has to buy in order to secure the car from accidental repairs, thefts, and any other damage caused. At present, the rates of car insurance can be anywhere between 3% to 4% of the booking price of the car. The more the cost of the insurance, higher will be the premiums that an owner has to pay every month for the car insurance. Moreover, with a huge type of car insurances available in the market each offering some additional coverage, the cost of buying a car insurance has become extremely expensive.

    Car financing cost- Car loan has made the dream of every car lover come true. But car loans also comes with monthly EMIs which need to be paid on time without missing. The EMI of a car loan not only include the interest but also part of the original loan amount as calculated by the bank. Usually, banks charge an interest rate ranging between 6% to 14%. So, in total the car owner has to pay a hefty amount in the form of loan EMI.

    Servicing and Maintenance cost- The expenses incurred by maintenance and servicing of a car are among the other costs of car ownership which can’t be avoided. This type of cost comes with the car and as long as you have the car you have to bear this expense. However, the servicing and maintenance cost up to some extent depend on how you use your car. Though modern days car has a strong and sturdy body, they are still prone to accidental damages. If you accidentally damage the body or engine of your car while owning it, the repairing cost will be extremely high.

    In short, the overall maintenance cost of a car turns out to be a substantial amount in one year. There are two types of maintenance cost:

    • Scheduled maintenance- Schedule servicing of your car needs to be done twice in a year. Each visit will cost minimum Rs. 2000 and this will increase with every passing year. As your car grows old, the wear and tear will be more and hence the servicing cost of the car will also increase.
    • Un-scheduled maintenance- Insurance will cover any damage caused due to an accident. But, as your car grows old there will be a lot of wear and tear on your car parts and these damages can actually cost you a bomb sometimes.

    Tax- When you buy a car, you obviously don’t consider the taxes that you have to pay for your car in the long run. But the truth is that the taxes make another very important component of car ownership cost. A good amount of money will go in octroi and RTO tax. These taxes are revised time to time by the government and based on that your expenses might increase or decrease.

    Cost of Ownership of Car in India

    According to the latest reports, the cost of owning cars in India has gone up mainly because of the ever-rising fuel prices. Though the price of the vehicle tags and the spare parts have been reduced by the car manufacturers in the recent past, this hasn't helped in reality because of the rise of the fuel prices. As a result of the increase in the prices of fuels such as petrol and diesel, the cost of ownership has increased compared to the cost of the previous years. The fuel cost accounts more than 85% of the average cost of the vehicle which is comprised of other components such as repair and maintenance cost, tyres replacement etc. The devastating condition of Indian roads also contributes to increase the TOC of a car. The unprecedented growth of traffic also putting extra pressure on the vital car parts resulting in increased damages. As a result, your car spends a good amount of time in garage then road. All these factors playing a vital role in putting pressure on the car owner’s pocket. Moreover, the cost of ownership of a car in India is more for diesel cars compared to petrol cars. You can differentiate TOC between diesel and petrol car based on the following points.

    Some parts of your car are extremely vulnerable to wear and tears are the battery, radiator components, clutch & pressure plate, timing belt, etc. costs low in petrol car compared to that of the diesel cars. The fluid capacity and oil replacement program are also good for the diesel cars.

    How to Calculate the Cost of Ownership of a Car?

    While calculating the cost of owning your car, must remember that the price of the car is one single component of the total expense that you have to spend on your car in the coming years. Your car is an asset which you need to preserve and maintain by investing a good amount of money from your own pocket. So, while buying a car be prepared for all these coming expenses. In short, make the decision of buying a car only if you feel confident about bearing all the future expenses associated with car ownership. Well, the good news is now you can calculate the cost of ownership of your car in just one click. Some authentic and reliable websites have come up with an automated tool to calculate the Total Cost of Ownership of your car effectively. Here is how you can calculate the TOC of your car through this type of tool:

    • First, you need to select brand from the drop-down list
    • Second, you have select the model of your car from the given list
    • Third, again from the drop-down list select variant
    • Now, in the fourth option select your location i.e, your state
    • Last you need to select the average travel of your car per year
    • After putting all info correctly click on calculate button to find the final TCO of your car

    How to use the TOC Calculators?

    These type of automated tools take some of the vital parameters to come up with the final figure of your TCO. First and foremost is the insurance cost of your car followed by fuel cost, then comes the maintenance cost and finally finance + loss in value = TOC. So, with this powerful tool, you can find out the TOC of your car in just a few seconds. Once you know your TOC you can decide your car considering your income and expenses.

    In India car is often considered as a luxury affair owing to the high cost of cars. However, with the passing years, the scenario has changed a lot and car buying is no more a luxury but a necessity for people. More and more car manufacturing companies have come forward and rolled out a plethora of budget-friendly cars that have made it easier for the car buyers to own a car that they desire. However, the cost of ownership of a car is not only limited to the price of the car, but it is made up of several other components.

    Easy Car Loans for Buying Cars

    Not only the auto-making companies but also the banks in a quest to make the car borrowing process easier for the buyers have rolled out a number of car loan offers. In other words, it can be said that the cost of ownership of cars in India has become much affordable with the advent of the car loans. Here are the benefits of opting for car loans to buy your desirable car:

    • Easy and affordable loans with flexible EMIs
    • Low-interest rate on the loans
    • Around 80% to 100% of financing of the car
    • Long loan repayment tenures
    • Easy and minimal documentation process

    To conclude, it can be said that buying a car in India has become extremely easier with a wide variety of budget-friendly cars. Additionally, while buying a car you can also get hold of a number of offers and discounts from the dealers which makes the purchase much easier for you. While there are already a number of cars on the market, and many of them are in the queue to get launched soon, buying a car has become a cakewalk. Ranging from budget-friendly cars to luxury cars like sedans, there are a number of options to choose from. Hence, there are a variety of options for people who are willing to buy new cars at an affordable price range. All the buyer has to do is to calculate the TOC of the car and assess his or her ability to bear the cost in future.

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