The enthusiast in me likes to drive! But only on the weekends when there's no traffic. Because giving the left foot a workout for two hours in the morning and again in the evening is not my idea of fun. You try driving to Gurugram every day. Of course using public transport has its own drawbacks - the unnecessary jostling of the metro coach, sprinting to catch the DTC bus and don't even get me started on the BO.
Uber on the other hand is something I have gotten accustomed to. You chose when you want to leave, use the time on the road to catch up on some reading and no last mile connectivity headaches of the bus or the metro. Of course there's the matter of the fuel prices which affects pretty much everything from the monthly budget if you're driving a car to the Uber bill. So let's take a more mathematical approach to decide whether it makes sense to just Uber everywhere rather than driving?
Let’s take three scenarios, one is to own and use a hatchback car for 5 years to commute to work in a metro city like Gurugram without taking any car loan, second is to own a car with the help of car loan, and third would be to book an Uber wherever you go. Given that commuting to work occupies a significant travel time and is a definite recurring expense for most of us, we have focused on the commute costs to give you a broad idea regarding which option suits your bill the most. Moving forward, let's dig deeper into the costs involved in all these three scenarios.
Scenario 1-Purchasing a car without car loan
Ex showroom price of the hatchback car- Rs 4.93 lakh
RTO charges (Road tax)- Rs 26,300
Car Insurance premium-Rs 21,533
Others (Fast tag)-Rs 500
Estimated on road price-5,41,333
Expected total annual service cost for 5 years- Rs 15821
Estimated mileage of the car-21.79 kmpl
Fuel cost per month (assuming you commute to work for 23 days per month for below mentioned distances):?
If driven 20km per day-Rs 2024 (Petrol price taken as Rs 95.88 as on 03.11.2021 in Gurugram)
If driven 50km per day-Rs 5060
If driven 70km per day-Rs 7084
Lets look at the expected total money you would have shelled out on office commute in 5 years since the purchase of the hatchback:
If driven 20km per day for 5 years-Rs 1,21,440 fuel cost + Rs 15821 (Service cost) + Rs 5,41,333 (On road price)= Rs 6,78,594
If driven 50km per day for 5 years-Rs3,03,600? fuel cost + Rs 15821 (Service cost) + Rs 5,41,333 (On road price)= Rs 8,60,754
If driven 70km per day for 5 years-Rs 4,25,040 fuel cost + Rs 15821 (Service cost) + Rs 5,41,333 (On road price)=Rs 9,82,194
Scenario 2-Purchasing a car with the help of car loan
If you decide to purchase the above mentioned hatchback having on road price of Rs 5,41,333 with the help of a car loan, here’s what the calculation can turn out to be:
Down payment (assuming you gave 10% of on road price) - Rs 54133
Loan amount (On road price minus down payment) - Rs 4,87,200
Interest rate - 7.25% p.a.
Tenure - 5 years
EMI - Rs 9,705
Total cost of the car loan (Principal + Interest) -?Rs 5,82,283
Total paid to own the car (down payment plus car loan payment) -
Assuming rest of the commute charges and service cost as same, the expected total money you would have shelled out towards office commuting in 5 years since purchase of the hatchback car with the help of car loan,would be:
If driven 20km per day for 5 years - Rs 1,21,440 fuel cost + Rs 15821 (Service cost) + Rs 6,36,416 (Cost of car purchase with the help of car loan)= Rs 7,73,677
If driven 50km per day for 5 years - Rs3,03,600? fuel cost + Rs 15821 (Service cost) + Rs 6,36,416 (Cost of car purchase with the help of car loan)= Rs 9,55,837
If driven 70km per day for 5 years?-?Rs 4,25,040 fuel cost + Rs 15821 (Service cost) + Rs 6,36,416 (Cost of car purchase with the help of car loan)=Rs 10,77,277
Scenario 3- Booking Uber cab?
It’s difficult to put a straight price for booking a cab, since the prices vary depending on the type of car chosen, time of the day (peak or non peak), prevalent fuel prices, demand etc,, So, we have taken some assumptions to give you broad idea, like you book the regular ride (Uber go), and we have taken the prices as visible on the app at that point of time.?
Estimated ride cost per month as per Uber app (assuming you commute to work in Delhi NCR by booking Ubergo for both sides, for 23 days per month, for below mentioned distances):?
If cab booked for 20km per day - Rs 8,763 (Estimate cost of per ride-Rs 381)
If driven 50km per day -?Rs 18,354 (Estimate cost of per ride-Rs 798)
If driven 70km per day -?Rs 24,150 (Estimate cost of per ride-Rs 1050)
Total commute cost for availing cab services everywhere for 5 years would turn out to be as follows:
If cab booked for 20km per day for 23 working days of commute for 5 years - Rs 5,25,780
If cab booked for 50km per day? for 23 working days of commute for 5 years -Rs 11,01,240?
If cab booked for 70km per day? for 23 working days of commute for 5 years -Rs 14,49,900
As we can see from the above set of calculations in all three scenarios, the decision to own a car or just Uber everywhere would primarily be dependent on the distance you cover for commuting. For short distances like 20km per day, booking an uber is likely to cost you significantly less and turn out to be cost effective, given the difference in travel costs when commuted through your own car vs an Uber (owning a car without carloan Rs 6,78,594 vs owning a car with car loan Rs 7,73,677 vs booking an Ubergo? Rs 5,25,780.?
On the other hand, for medium to long distance commutes like 50km per day and 70km per day, owning a car is likely to turn out to be more affordable .(50km drive through owning a car without car loan Rs 8,60,754 vs 50km drive through owning a car with car loan Rs 9,55,837 vs booking an Ubergo for 50km Rs 11,01,240; and 70km drive through owning a car without car loan Rs 9,82,194 vs 70km drive through owning a car with car loan Rs 10,77,277 vs booking an Ubergo for 70km? Rs 14,49,900)
Moreover, besides this mathematical calculation, another thing that works in favour of owning a car is the comfort and convenience to not rely on something else to travel, especially during emergencies or in other scenarios when you have paucity of time. Sometimes you may have to rush to or come back from the office and there are always unplanned trips that can come up. In such cases, solely relying on cab service may put you in trouble, as some day the app might not be working properly or the drivers might be on strike too and there's the dreaded 'surge'. But, whenever you aim to purchase a car, make sure to not go overboard and end up owning a much expensive one which hurts your pocket. That way, your decision to own a car can backfire and lead to higher expenses instead of higher savings vis-a-vis the decision of booking an Uber.
Let's us know in the comments whether you would drive or take an Uber everywhere??For more of such interesting financial content,?click here.
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