Should you buy or hire a car?

In the light of the debate over millennials' penchant for hiring cabs rather than buying their own cars, ET Wealth does a cost comparison for both options to help you make a clear choice.

Let us compare the total cost of owning a Maruti Suzuki Dzire and hiring Uber cabs, in Delhi, over a period of three years. We have only considered office trips and excluded other personal trips, including holidays.

A. COST OF OWNING A CAR
Price of Maruti Suzuki Dzire: Rs 5.82 lakh (Ex-showroom, Delhi)
Loan cost
Interest rate: 9.5%
Loan term: 3 years
Down payment Rs 58,200 + Loan interest Rs 75,495

Total insurance cost (3 years): Rs 60,000
Registration/taxes (3 years): Rs 72,000
Total servicing & maintenance cost (3 years): Rs 30,000
Parking cost & miscellaneous charges (3 years): Rs 50,000

Total running cost (3 years)
Monthly distance covered: 1,000 km
Petrol cost: Rs 72.7/lt
Mileage: 22 km/lt
Monthly running cost: Rs 3,304
Total running cost: Rs 1.18 lakh

Cost of ownership in 3 years: Rs 9.8 lakh
Total cost of owning in 3 years (with chauffeur): Rs 15.2 lakh (@ Rs 15,000 per month)
Resale value after 3 years: Rs 3.7 lakh

Net cost: Rs 6.1 lakh
Rs 11.5 lakh (with chauffeur)

B. COST OF HIRING A CAR
Assumptions

• Daily total distance covered: 40 km
• Daily trips: 2
• Time taken in each trip: 50 minutes
• Tolls, tax and surge pricing included.
• Number of days the car is used in a month: 25 days
• Cost of petrol in Delhi on 19 September (actual): Rs 72.7/litre

Uber Go
Uber fare is the sum of base fare and charges for time and distance covered during each trip
Base fare: Rs 52.5
Per minute: Rs 1.05
Per km: Rs 7.8

1) Without surge pricing (with toll, etc)
Base fare (For two trips in a day) + Time (For two trips of 50 minutes each) + Distance (For 20 km one way, or 40 km in a day) + Toll (Can vary and include tax, surcharge)

Rs 105 (Base fare) + Rs 105 (Time) + Rs 315 (Distance) + Rs 50 (Toll) = Rs 575 (Cost per day)
Total cost for 3 years: Rs 5.1 lakh

2) With surge pricing (including toll, etc)
[Cost per day x multiplier (which can vary)]

575 X 1.5 = Rs 862 (Cost per day)
Total cost for 3 years: Rs 7.7 lakh

HIRING IS BETTER WITHOUT SURGE PRICING

1. Without surge and without chauffeur you save: Rs 1 lakh in 3 years, if you HIRE a car
2. Without surge and with chauffeur you save: Rs 6.3 lakh in 3 years, if you HIRE a car
3. With surge, without chauffeur you save: Rs 1.5 lakh in 3 years, if you OWN a car
4. With surge, with chauffeur you save: Rs 3.7 lakh in 3 years, if you HIRE a car

ET Wealth analysis
Hiring an Uber is cheaper than buying a car, with or without a chauffeur. However, owning a car is a better option if you are impacted by surge pricing. Here are some other pros & cons of both the options.

IF YOU OWN A CAR...
Personal satisfaction
The sheer pleasure of buying and driving one's own car is incomparable.

Ease of taking trips
Dealing with an emergency or taking driving vacations are much easier to deal with if you have your own car

Instant access
You have a car at your disposal at all times, without the hassle of booking, waiting or cancellation.

Safer for women
Given the cases of misconduct by cab drivers, it’s safer for hiring an Uber is cheaper women to drive on their own.

IF YOU HIRE A CAB...
Dealing with traffic snarls
The biggest benefit of a cab is that you don't have to drive yourself out of frequent traffic jams and bottlenecks.

Better use of time
Hiring a car, if you don't have a chauffeur, means plenty of time at hand to catch up with offi ce mails and make calls.

No need for navigation
If your sense of direction is non-existent, it is easier to leave the complicated routes to the driver, particularly in metros.