You've been itching to get your hands on your dream car. Now that you have the money for the down payment and the loan is in place, you're thrilled you can afford to buy the vehicle. But can you afford to own it?
The sticker price of the car is only the first in a long list of costs you will pay. Along with your car, you'll also be driving home a host of hidden costs, three of which are going to bleed your wallet every year fuel expenses, insurance premiums and maintenance cost.
Most people only calculate how much they'll be spending on petrol or diesel. So, if you're planning to buy a Maruti 800, which has a fuel economy of about 20 kmpl and will drive, say, 10,000 km a year, you'll probably spend Rs 2.25 per km. Correct? No, in fact, you're way off the mark. It will actually cost you Rs 4.95 per km. This is the startling result of the Customer Satisfaction Study 2008 conducted by TNS-India Automotive. The survey considers how paying for premiums and servicing jacks up the running cost of your car over three years.
"It's surprising why people consider only fuel consumption while buying a car. They are willing to spend Rs 50,000-60,000 more for the diesel variant though they'll probably drive only an extra 1,000 km a year, which won't even begin to cover the additional expenditure. The rest of the expenses are going to be nearly the same for both variants, says auto analyst Tutu Dhawan.
The Cost of a Check-up Car manufacturers recommend that you have your car serviced after every 5,000 km, which means you'll need two servicings each year. You will also have to regularly replace certain parts such as oil filter, air filter, spark plugs, engine coolant, brake fluid, etc. The more expensive the car, the costlier it is to replace the parts. For instance, changing the air and fuel filters for a Maruti WagonR will cost about Rs 450, but for a Tata Indigo it will amount to about Rs 650. The one-time servicing cost for a Ford Fiesta is Rs 2,000-2,500, but to have a Toyota Camry serviced, you'll have to pay Rs 3,200-3,500.
The biggest jump in maintenance budget will come at 40,000 km, when you might need to change the tyres. This will cost you Rs 6,000-12,000. You may also need to replace the brake discs, batteries, timing belt...the list is long.
A Premium Expense This is an annual expense most people overlook. In the case of cars with an engine capacity of more than 1,600 cc, the insurance premiums for the first few years can be much higher than the fuel expenditure. As the car value depreciates each year, the premium will come down, but this is offset by the rising maintenance costs. The insurance premium for a Skoda Superb over five years is enough to buy a small car!
Have you Considered these? When you're paying lakhs to buy a car, a few thousands for registration doesn't seem much. But the type of car you buy can make a significant difference. For instance, the registration and road tax in Uttar Pradesh for the Hyundai i10 Era variant is Rs 9,990, whereas it's Rs 10,500 for the Magna. If you're getting the car registered in Delhi, you'll have to pay an extra Rs 2,000 as parking charge. This amount is Rs 4,000 for cars that cost above Rs 4 lakh.
Then there are unplanned incidental expenses that can dent your budget. "Even minor body repair due to an accident can be expensive. Though your insurance policy will cover the cost, you lose the benefit of the no-claim bonus, says Pradeep Saxena, senior V-P, TNSIndia Automotive. Saxena cites the case of a Toyota Corolla owner who had to replace his side-view mirrors twice because they had been stolen. Each time it cost him Rs 14,000.
So, if you're buying a car, check if you need to overhaul your finances before hitting the accelerator.
Reproduced From Money Today. Copyright 2009. LMIL. All rights reserved.
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|Publication:||Money Today (New Delhi, India)|
|Date:||Oct 1, 2009|
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