# The real cost of car ownership (PS: most are losing money)

I had purchased a used car almost a year ago that I sold yesterday, here is the math I did mentally before taking the decision to sell it:

A used car costs approx: 3.5L (very base model, higher if you move to a standard car)

Interest on car cost in 4 years: 1.8L

Cost to maintain: 12K / yr

Insurance: 12K / yr

Dep.: 20% / yr

Parking costs in a city like Mumbai, along with the fact that it takes 15 – 20 mins on an average to find a spot and 50 – 70 rs per 2 hours to park.

Petrol: 18K / yr (1500 rs / month avg)

If you use car only for once in a week, the math for Ola, Uber or zoomcar (assuming 5 one way trips in a day) or one day rental for zoomcar to avg about 1600 rs/day assuming you use it for 48 days in a year, i.e 4 times a month for a day or 4 days at a stretch in a month, it would be 77,000 rs/yr (no maintenance and no insurance, no upfront cost, no deprecation)

If you use the car daily, it makes sense to buy, but if you use once in a week, ola, uber, or zoomcar is better.

Here’s the base math of what makes ola, uber or zoomcar cheaper.

Cost for zoomcar if used once per week: 6500 / month (and cost for insurance / dep. / maintenance is all included in this).

Cost for Ola, uber if used for 20 trips per month at 250 rs per trip: 5000 rs / month.

Cost for own car (considering dep at 20% / year, petrol usage of 15 km / trip), 4000 rs lost per month when 4 lakh is put in a dead asset like a car, 1000 rs lost in insurance and 1500 in petrol and 1000 in maintenance and dep. cost to be: 50K per year).

Total cost to own a car: 50K + 12K + 12K + 18K + 48K = 1.4L

Total cost for Ola, Uber or Zoomcar (if used for 48 days in a year at a flat rate of 1600 rs / day = 60 – 77K (60K for Ola, Uber, and 77K for Zoomcar)

You are actually losing 63K rs per year at least if you own a car and use it only for 30 days in a year, a better option is to use Ola, Uber or Zoomcar.

It would only make sense to own a car if you use it for 60 days in a year or 6+ days in a month to break even.

Ofcourse, there is the luxury factor involved in owning a car, plus convenience and emergencies, more often than not, Ola, Uber ditches you at night, if you can buy a car with cash, and spend only 5% of your net worth on a car, the above calculation doesn’t make sense in your case.

And here’s the bonus, Did you forget the fact that Ola, Uber comes with a driver, and ZoomCar comes with zero liability and allows you cash in hand.

** In the calculation above, considering depreciation at a flat of 50K / yr (which is very Conservative) / value of cash if invested at 1% per month (easy to do so in an MF).

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