Buying a Car vs Taking a Cab

  • Author :
  • TATA AIG Team
  • Published on :
  • 26/06/2020

Buying a car versus taking a cab. Now, both have their respective advantages and disadvantages. Learn more here.

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Buying a car vs Taking a cab

If you’ve been following the news, you’d have noticed there’s fresh heat in the popular “buying a car versus taking a cab” conversation. Now, both have their respective advantages and disadvantages and which option is better for you completely depends on who you are and how much you have to travel every day. But if you need some help figuring that out, we’ve got your back.

Let’s #ThinkAhead and see how the two options pan out in the long run.

The rules

To determine how much owning a car or taking a cab really cost you, we need to figure out the per kilometre cost of both. While figuring that out for the cab is quite easy – it’s available on their websites – to do the same for the car, we need to consider all the different expenses in the course of its life. That includes buying, maintenance, insurance and fuel. We’ll assume that the car is owned and driven for 5 years

Cost of owning a car

Which car you choose totally depends on you, but for the sake of the calculation, let’s go a little conservative and assume it costs Rs 6 lakh. A diesel car would give you a mileage of around 15 km and cost you roughly Rs 67 per litre. Keeping in mind travelling to and from office, occasional rounds to the market, meeting friends etc. you’d easily travel about 1500 km in a month. This, over a period of 5 years, would come around to Rs 4,02,000.

Now let’s look at our next cost – maintenance. If you are a safe driver, the total cost should not be more than Rs 20,000 in a year. So, over the run of 5 years, that would come around to Rs 1,00,000.

But of course, you would not drive on the roads without the safety of a comprehensive car insurance, would you? Of course not. If you purchase insurance from Tata AIG for a car in this range, the cost of your annual insurance would be about Rs 18,000. This would cover your car as well as you, including additional benefits such as coverage for loss of personal belongings, repair for glass, fibre, plastic and rubber parts, key replacement and more. So, in the course of 5 years you’d spend about Rs 90,000 on a comprehensive insurance plan. If you’re wondering how we calculated the premium, you can also do it for any car here.

Now let’s add it all up.

Cost of owning a car for 5 years = Cost of the car + insurance + cost of fuel + cost of maintenance

Rs 6,00,000 + Rs 90,000 + Rs 4,02,000 + Rs 1,00,000 = Rs 11,92,000

But what would you do with your car after 5 years if you’re not driving it? Most likely sell it, right? So, considering depreciation of 20% per year, you can sell off your car after 5 years for about Rs 2.6 lakh. So, your real cost of owning a car would be Rs 11,92,000 – Rs 2,60,00 which is Rs 9,32,000.

Cost of taking a cab

This is a simple one. An average cab ride costs around Rs 12 per km. So, if you travel 1,500 km every month, you’d be spending Rs 18,000 per month and that, in 5 years, would be Rs 10,80,000. And let’s not forget that we are not counting the late-night charges and surcharges levied during rush hours. Moreover, if you decide to take a trip or two in a year, that will take your expense to a whole new level.

Pros and cons

A major benefit of owning a car is the freedom of choosing when and where you want to travel without having to wait. This is especially true for short distances. And, most importantly, for times when cabs are not easily available- like during heavy rains, or during peak demand times. Plus, cars tend to be safer since you don't depend on a stranger to get you from point A to B. However, if you do hire a driver, it's an additional cost, while the cost of a cab includes that. In cities, parking can become an issue in crowded areas, and with ever-increasing traffic, driving can get tiring. In a cab, on the other hand, you can use your travel time to catch up on work/reading, make calls or even take a nap.

The final verdict

If your work and life require you to travel a decent distance every month (1500 km in our case), then buying your own car might be the better option, cost-wise. Apart from cost saving, it also provides you with the independence to move as you wish and whenever you wish. You don’t need to wait for the cab or pay extra just because it’s in higher demand. Moreover, your comprehensive car insurance can also cover you and your loved ones, which means that if there’s ever an accident, you at least won’t have to suffer financially.

So, understand your requirements and usages, and make the right choice. Just remember, if you’re going to be driving your own car, never do it without the right insurance.

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