Are you eligible to buy a car? Check Yourself

Most of the middle class  people are confused about buying their first car. Many of them are not sure if they can handle a car financially. Some of them don’t know the expenses that may come as a part of owning a car which is entirely different from owning two wheeler.

There are definitely multiple check points before you decide about buying a new car, let’s discuss few that would definitely help middle class people to decide whether to buy a car or not. 

Decision between New vs Used Car

Decision between new and used car when you plan to buy vehicles is always a difficult process for first time users. If budget allows, I would suggest to go for new car and if there are multiple factors involved in your decision, I would suggest to take a look at below:

User Car

• You don’t know the history of car, problems of the vehicle and how many people drove the car (which makes some impact in engine refining and life)
• You cannot take the car for a long trip as you don’t know what can happen
• if you get the service history and receipts. That would tell you how the car was maintained.
• Used cars always need atleast one-time service at company showroom to ensure all pending services / parts changes are done.
• You may have to spend 10 to 20k in a used car to ensure everything is Perfect.
• If you are buying the car for long term, you will be forced to spend a lot on used cars.
• If you just need to learn and planning to buy new car, it can be an option but still the engine condition matters a lot.

New Car

• Always it’s your hand decides The life of the vehicle and how good the car gets maintained.
• You will know the car better.
• You have your dealer to ask question if something goes wrong, as we have warranty period.
• Single driver cars are always the best and engine will be well refined for long term use

Operational Cost

Operational cost of a car mainly includes running cost, fuel cost, maintenance, insurance (yearly) and depreciation.

Fuel Cost - this is purely depends on the usage of your car. However, if you are not using your car for atleast 15000 kms per year, you are still not in a good need of a car. Occasional usage of car will end up in loss.  

Maintenance Cost - automobile industry applies variety of business ideas where one of them is low cost car and high maintenance charges. Most of the budget cars that are targeted to middle class families, has less than 5 lakhs on-road price. However, after one or two years parts changes and services might be required frequently and the companies gain money from it.

Here is some maintenance expenses for example (for first 4 years)

Maruti - 5000 per year 

Hyundai - 5000-6000 per year

Honda - 6000-7000 per year 

Tata - 5000-10000 per year

Volkswagen - 12000-15000 per year

Emergency Expenses - This is something everyone ignores when they plan to buy a car. For those who uses the car in villages and locally should maintain a 50,000 rupees for an emergency expense. For those who drive in cities and highways, I would suggest 1 lakh rupees to be maintained for any emergency. To explain this, remember we are behind the wheels and driving a car had potential hidden danger everywhere. Not just because your our own mistakes, but there are many bad drivers and innocent people on the road. If there’s any emergency occurs you should be prepared with some money to handle it medically, legally and also for offline settlements. 

Depreciation and resale - Vehicles are always subjected to depreciation of minimum 10% per year and 20% to the maximum. You won’t get the same price of the car right next day after you originally buy it. So you should always think that an unused car is equal to dead money. So make sure the car is being used and you save time or money in the other side. It’s always better to think about resale or upgrade of a car after minimum of 5 years usage that makes it economical. 

All these suggestions and ideas apply to middle class people and who are about to upgrade from a bike to car. If you look at from a luxury perspective, most of the points may not worth reading. 

Hope this helps.