Owning a car can mean many things to many people. For some it is a way to go from point A to point B, rather conveniently. Many other may view it as a symbol of success. For some it represents manifestation of an aspiration. However not all of us bother to calculate the cost of ownership of car.
How do you calculate the daily cost of owning of car?
Here is a calculator that can help! Download that and make your calculations –
(Fill the columns marked in yellow)
Here is how you can use the calculator:
- Enter the total cost of buying the car. This will include cost of registration, total amount you pay in EMIs if you take car loan etc. This is the total amount you pay for buying the car. You can calculate EMIs with any online calculator (Example). Currently most of the banks are offering rate of interest in range of 9-10% (This keeps on varying)
- Enter the amount you need to maintain it. This includes the cost of maintenance, insurance, any accessories you add etc. Do not include fuel cost, since this is variable and will depend upon the amount you drive. Here the objective is to find out just the cost of owning a car irrespective of how much it runs. (However you can make tweaks in the excel sheet to suit your needs!)
- Enter the number of years you plan to keep the car. (You can tweak the formulate in the Excel sheet, if you want to use months instead of years)
- Enter the expected resale value of the car. Again, there are enough online resources to estimate the car resale value.
Based upon the above inputs you can get the cost of owning a car.
How can you use this data on cost of owning the car?
Here are couple of ways:
- If you are wondering whether to by a car of manage with help of public transport or cabs or car rental service, this number can be useful.Your frequency of use and distance/ duration of drive can have an important role to play in this
- If you are thinking whether to buy a new versus used car, then this data can be useful. However, the math works in favor of used cars almost all the times!
In this example, a car worth Rs. 700,000 (+ Rs. 50,000 for registration etc.) is bought using a car loan. EMI of the loan is Rs. 10,000 over a 60 month period (Hence, the loan amount paid is Rs. 600,000. Add Rs. 200,000 down payment & Rs. 50,000 registration (total Rs. 850,000). If the car is sold for half the value in 5 years (i.e. 50% of Rs. 700,000 – Rs. 350,000) and in the meanwhile Rs. 100,000 is spent on maintenance (too optimistic?), the cost per day of owning that car is around Rs. 329.
This is a ballpark figure based upon lot of assumptions. Still, it may be good to evaluate the per day cost of buying a car, if you are in two minds – whether to buy or not to buy!
Have more inputs or suggestions?