Don't be fooled by just the EMI payment that you will be making every month. There are several other costs that you need to factor in before buying yourself a car.
Planning to graduate to a car from a bike? Perhaps it is going to be your first car. However, don't be fooled by just the EMI payment that you will be making every month. There are several other costs that you need to factor in before buying yourself a car. Here are the things that you must be prepared for before thinking of buying a car. Remember, the equal monthly installment (EMI) is just one small part of the total cost of car ownership; additional expenses can double the EMI. Because a car only depreciates in value, it should not be considered an investment at all.
Depreciating product: Unlike real estate or gold, your car never going to appreciate in value unless, it is a vintage car. Drive it out of the showroom and it immediately becomes second hand, if you choose to sell it even within the next half an hour and it will lose almost 10% of its value. The car will go down further by another 30 - 40% in the first year itself.
Rising costs of fuel: If you've been monitoring the price of oil per barrel you will know exactly what we're talking about. You will have to set aside enough calculating exactly how many kms you put on your car approximately every month. Petrol is more expensive than diesel and maybe if you put more than 100 kms on your car daily, you may seriously want to conider getting yourself a car with alternative fuel such as LPG or CNG.
Calculate the Interest: The EMI includes not only payments towards the original loan, but also the interest due on it. Don’t forget to calculate the interest rates charged which may vary from lender to lender.
Taxes: There is also RTO tax and Octroi to be considered which will further increase costs while purchasing your car.
Scheduled maintenance: Your car needs to be serviced at regular intervals. This varies depending on the car model you drive. Remember to factor in costs per servicing which may vary from Rs 2000 per trip to Rs 50,000 per trip for the luxury models.
Unscheduled maintenance: You may experience engine part failure which can come as an unexpected expense at any point in time. Be prepared for it. Afterall, it is a machine which can fail at any time. Fuel pump problems or carburettor problems are some of the common problems buyers face from time to time, so best to be prepared financailly for such emergencies.
Insurance: If you’re going to be driving your car, you need to have insurance. Whether it is comprehensive or third party it is totally up to you but that is also an expense that you will incur.
Repair costs: Niggles will crop up from time to time. Driving in traffic may damage your car's body or engine. Remember that accidental damage can cost you a bomb.
Retrofitting accessories: If you opt for additional accessories such as anti theft system or music systems or body kits, etc, the cost of your car will automatically go up.
Miscellaneous: Toll tickets and parking expenses are other expenses that you must be ready to cough out money for.
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