Should you buy a new car or just use ride-hailing apps?

Both have their distinct advantages but owning a car is costlier if you are to employ a driver

- Akshat Rohatgi, Neil Borate

Buying a car has a huge upfront cost. If you take a loan, you will also have to factor in the amount you need to pay to the lender in equated monthly instalments (EMIs). Then, you have to account for the maintenance costs of the car, its insurance, and fuel costs. More importantly, you will need to shell out more if you employ a driver.

You do have another choice, though: Continue with your ride-sharing apps instead of buying a car. There are issues with that as well. The per-km fare is usually high and this can go up sharply during peak times (also known as surge pricing). You also might not get a cab in time—that depends on the availability of drivers in the area. And, on many occasions, they are simply not available at night.

It’s now time for you to choose one of the options. Still unsure? If so, let’s break down the cost of owning a car for a period of seven years with a round-trip of, say, 40km per day and fuel efficiency of 12 km per litre in city traffic. Although many people retain their cars for longer periods, seven years is a good average, especially for millennials and GenZ who periodically upgrade their cars. So, what exactly are the costs of owning a car? Here goes.

Downpayment and EMIs: A typical high-end hatchback or midsize subcompact SUV costs around ₹10 lakh. Assuming a down payment of 30%, or ₹3 lakh, and interest on the remaining loan in the range of 7-9% with a 1% processing fee, and a duration of five years, the total EMI comes out to ₹14,000 per month and the total financing of ownership at ₹11.5 lakh.