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How to be a good owner of a car?

Wed, Jan 11, 2017, 12:07 PM
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What does one need to buy a car? Sufficient funds. A credit card in the hand or a pan card in the pocket. A cheque book will do. But to be a good owner of a car, you need to know a lot of things. Questions like an old car or new one, with cash or on loan, petrol or diesel...are all what make up this story.

You need to be well-off to maintain a car. The cost of maintenance of a car is three times that of a bike. Especially for those with a passion to travel, a car is an asset that can never rest. Consequently, your pockets are empty.

Petrol, diesel, CNG, LPG

The cost of a car and it's maintenance depends on the fuel that is used. The cost of a petrol car is much less than those using other fuels. A diesel car costs at least one lakh rupees more than the one running on petrol. Cars running on Compressed  Natural Gas (CNG) costs at least Rs. 35,000 to Rs. 40,000 more than those using petrol. As for cars running on Liquid Petroleum Gas (LPG), they cost at least Rs. 25,000 more. But petrol is the most expensive of fuels. If petrol is say Rs. 65 per litre in Delhi market, diesel is Rs. 55 per litre, CNG is Rs. 40 per kilo and LPG is Rs. 55 per kilo. You can see that petrol is the costliest and CNG is the cheapest. The cost of maintaining CNG cars too is very less.

The price of diesel is less, but the cost of maintaining a diesel car is more. So you should choose a car based on the number of kms  you travel per day and how much you use the car on an average.

Going by the rate of fuel, if you are travelling 500 kms on an average per month, you need  Rs. 2,450 (at the rate of 13 kms per litre) for fuelling a petrol car;  Rs. 1,700 (at 16 kms per litre) for a diesel  car; Rs. 1.100 (at 18 kms per litre) for CNG car; and Rs 2,200 (at the rate of 11 kms per litre) for the one that is using LPG.

If you travel say 1,000 kms on an average per month, it will cost you Rs. 5,000 for a petrol, Rs. 3,400 for diesel, Rs. 2,000 for CNG and Rs. 4,400 for LPG.  Similarly, for travelling 1,500 kms on an average per month, it is Rs. 7,300 for a petrol car, Rs. 5,000 for a diesel car, Rs. 3,500 for CNG car and Rs. 6,500 per month for the one using LPG.

Going by the above estimation, those travelling less than 500 kms per month, might conveniently buy a petrol car. Those travelling 1,000 kms on an average per month, especially in cities, can choose a CNG car. Those travelling 1,500 kms and above, can buy a diesel car. Though diesel cars cost more and their maintenance is expensive, the fuel is cheap for  travelling longer distances.

CNG cars are the cheapest to maintain. But each cylinder of CNG costs anywhere between Rs. 10,000 to Rs. 12,000. Even if you have a spare one, it will run for not more than 360 kms per month. So those travelling long distances should take care of the fuel factor. In cities, those who have the patience to keep refuelling frequently over long distances, better choose CNG cars.  Diesel cars have better pick-up than petrol ones. The vibration in petrol car is less. Spare parts for a diesel car cost more. The pick-up of CNG car is less than both.  Air filters, spark plugs and CNG cartridges of CNG cars have to be changed frequently. The experience of a user should be taken into consideration.

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Electric car

Electric cars have not gained much popularity in Indian, because of many factors like, pick-up, long distance travelling, recharge facilities etc,.  The most prominent electric car available in India is Mahindra Reva E2O. The price is nearly Rs. 5 lakh. It is environment friendly. With one-time charging it will run 100 kms, at a speed of 80 kmph.

Normally it takes five hours to charge. At Reva service point the charging time is decreased to just one hour. Tata Motors is planning to launch an electric version of Indica Vista, along with BMW. Cheverlet Beat is another electric car that is in the offing. These are convenient for city dwellers. The only problem is charging. The charging time is more when it is done at home, whereas the number of charging points are less, while on the road.

When to buy?

Companies announce discounts and offers over cars, during December. They like to get rid of the piled up vehicles by the close of the year. In January, they launch new models .  It is wise for those who want to use a car for at least eight years, to buy it in December. But for those who like to change the car after three to four years, it is better to wait and buy a new model in the beginning of next year. The resale value of the car depends on the model. Only a vehicle that has been used for say eight years has real value for money, in resale. If the car is used less before resale, the owner has to suffer a loss.

What type of car to buy ?

Is it necessary to buy a car based on seating capacity, like 4 seater, 6 seater , 8 seater with all the added luxury factors? It is far from intelligent to buy a car that costs beyond your budget , just for showing off. The cost of the car should not exceed 60 per cent of the buyer's annual income. If buying on loan, the Equated Monthly Installment (EMI), should be about 15 per cent of net income.

Supposing you buy a car with Rs. 6 lakhs on loan. You will pay Rs. 2 lakh as down payment, and will pay the remaining four lakhs in 60 installments. In this case, you will have to pay Rs. 9,000 per month, at the rate of Rs. 12 per annum interest on loan. Even if your down payment is less than Rs. 2 lakh, and the time for paying installments is shortened, you will be paying more towards installments. So it is better to take your financial capability into consideration, before planning.

Should be checked before delivery

The car should be examined carefully before taking delivery. Always chose in day time. The faults would be seen clearly. If you are buying in the months of January or February, the companies will try to push an old model. The Vehicle Indentification Number (VIN) should be checked for this, as the year of manufacture will be given. Take Form 22 from the dealer. It will have the details of the car.

VAT bill and Temporary Registration Certificate too has to be checked. The engine number, chassis number and other details that are mentioned in bill should be duly checked. Do not forget to take insurance, pollution control certificates and warranty cards for  battery and tyres. It is  important to check if the tools, spare wheel, battery condition, and sufficiency of engine oil that come with the car.

It is essential to test drive the car before buying it, as the functionality of the car is the most important factor that would let you decide if you want to buy it. That is why it is important to visit almost all dealers and test drive various models, and find out the price. If a car functions well in test drive, it would be easier to buy it from a showroom where the price is the least.

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Good service should be on hand once a car is bought. Only then will it function well for a long time and be comfortable for the user. Maruthi Suzuki tops the list with handy after-sales servicing. It's showrooms and service centres are set up in the highest number of centres. Moreover, cost of servicing and spare parts are affordable.  Next in line is Honda, though servicing  points are less in number.  Hyundai, Mahindra, Toyota and Tata come only after these.

Safety most important

Cars with less ground clearance (space between the bottom of the car and the road) are not safe, especially on roads with a number of potholes, like in Hyderabad. That is why mostly people prefer Sports Utility Vehicles (SUV). Even road accidents and deaths are high here. So it is better to buy cars with air bags and  Anti- lock Braking System  or Anti-skid Braking System (ABS). A video camera facility in dashboard will help in detecting the cause of accidents if any.

Cash or loan?

If cash is ready on hand, it is better to buy a car with it, rather than take a loan, experts say. Because the value of a car depreciates with time. For this, it is not advisable to take loans at 12 per cent or more interest rate. Also, you will have to shell down loan processing fee and fresh registration fee after the loan is cleared, which are additional payments.

If you are unable to pay the installments for some reason, the financiers will wait for two or three months and then take away the vehicle. At the same time, if you buy with cash, you can sell the car when you need money. A car can be bought on loaned amounts if the rate of interest is 2 per cent or less or no interest payments. If buying a car with loans, you should make sure that the cost of the vehicle as also the interest rate is less.

Let's see an example: If a car is being bought for say Rs. 6 lakh, on loan basis, downpayment is Rs. 2 lakhs and the remaining Rs. 4 lakh is loaned. The interest rate on this is 12 per cent per annum. The loan is to be cleared within 60 months. The EMI is Rs. 9,000. That is you have to pay Rs. 5.40 lakhs in five years. Rs. 1.40 is interest. Supposing you pay Rs. 6 lakhs for the car, at the time of purchase, without availing loan and invest the same Rs. 9,000 in equity mutual funds under Simple Investment Plan (SIP), in 60 months you will earn Rs. 7.4 lakhs, at the interest rate of Rs. 12 per cent per annum. The same investment will grow to Rs. 7.84 lakh with 14 per cent per annum interest.  Moreover, if you are buying a car with ready cash, you can avail discounts and offers.

On the other hand, if you have sufficient cash that would fetch you double the amount of  interests paid on loan, you can invest the cash and go in for loan payment for buying car.

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Old car or new?

A new  car is  good because of the condition. There will be no problems for some time. All features will be new. The manufacturer will give you warranty. But the cost is more. The depreciation value too is more in the first two to three years. Second hand car costs less. But the condition of the car should be checked thoroughly before taking it. The maintenance cost is less compared to that of a new car. There will not be much loss on cost price, when resold. Insurance premium is also less.

The buyer has to decide which car is convenient for his budget. Supposing you decide to buy a model of Hyundai, which is Rs. 6 lakhs. Including some other facilities, the cost would go by another Rs. 50,000. After using say for five years, the resale value of the car is Rs. 2 lakh. It means, net loss of Rs. 4 lakh.

But supposing you are buying an old car in good condition for Rs. 2 lakhs. You use it for two years and sell it for Rs. 60,000. Net loss in this case is Rs. 1.40 lakhs. If you had invested the Rs. 4.5 lakhs that you did not spend on a new car, in mutual funds, you will earn Rs 8 lakh at the end of five years, at the rate of 12 per cent per annum interest. So by the time you sell the old car, you would have had earned a profit of Rs. 3.5 lakhs. Now check out which is more economical. Even if we are spending more on maintenance of old car, the utility value of an old one is better than a new one.

Supposing you find spending Rs. 6 lakhs a burden on a new Hyundai car. At the same time not interested in buying an old one. Then what do you do? You should buy a new car, of lesser price say between Rs. 3 lakhs to Rs. 4 lakhs. This is called on-the-road price.  Several cars like Reno Kwid, Maruti Suzuki Alto, Datsun and Redigo are available in this range.

Old cars too can bought through loans. But the interest rate is two per cent higher than that charged on loans for new cars. You want to buy a second hand car on loan. Then you can do it from the owner who is very well known to you and you know how he maintained his car. There are certified pre-owned cars, available with dealers. These cars are reconditioned by the manufacturer and sold through the dealers. These are safe for purchasing  rather than approaching strangers. These cars also come with warranty.

Some companies give warranty for all spare parts, while others offer warranty for just the engine. Whatever, when buying a second hand car, it is better to take it from a dealer or someone who is very well known. Otherwise you will be vexed with the cost of maintaining it. Also, before buying be prepared by getting it checked by a good mechanic, test drive it and make sure there are no noises from the engine.

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Best cars for good mileage

Maruti  Suzuki cars are best for mileage. Ciyaz model that is a diesel car, costing Rs. 8 lakh, gives 28 kmph mileage. Another diesel model, Celerio, costing Rs. 5 lakh, gives 27.62 kmph, the company says.  Baleno, costing Rs. 7 lakhs, runs 27.39 kms for every litre of diesel.

Honda Jazz, a diesel model that costs above Rs. 6 lakhs, Hatchback dealer model, gives 27.3 kmph, according to the company.  The others are: Tata Tiago (diesel), 27.29 kmph, Maruthi Swift (diesel) costs Rs. 6 lakhs above and gives 26.59 kmph. Honda city (diesel), costs above Rs. 10 lakh and gives 26 kmph, Ford Piago (diesel) that costs Rs. 7 lakhs and above gives 25.83 kmph, Honda Amaze (diesel) costing Rs. 7 lakhs above, gives 25.8 kmph, Cheverlet Beat (diesel) costing Rs. 6 lakh and above, gives 25.44 kmph, Reno Kwid (petrol) costs Rs. 3 lakhs and above, gives 25.17 kmph.

Popular cars costing around Rs. 5 lakhs

Maruthi Suzuki Alto, Wagon R, Celerio, Reno Kwid, Hyundai Ion, i10, Datsun Redigo etc., models are popular.

Upcoming cars at Rs. 5 lakhs

Tata Kite Sedan will be launched in May 2017. It is estimated to cost between Rs. 4 lakhs to Rs. 5 lakhs.  It will give strong competition to Ford Piago Aspire, Maruthi Suzuki Desire. The diesel variant will give 25 kmph, it is estimated.

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Tata  Pelican

Tata Pelican, a Nano model with a bigger engine will be launched in December 2016. It is said to be priced between Rs. 2.50 lakh to Rs. 3.80 lakh. It is a competition for Maruthi Alto. Having a 800 cc petrol engine, it will give 22 kmph mileage. A new version of  Chevorlet Beat will come up soon. To come in both petrol and diesel models, it might cost Rs. 4.5 lakhs. It will compete with Maruthi Celerio and Hyundai Grand i10 models. Another model, Chevorlet Beat Active will be launched sometime next year, in India. It will cost around Rs. 5 lakh. Hyundai Santro new model will come in 2018. The price of this will start from Rs. 4 lakh.


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