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Ola, Uber Cab Booking (Renting) vs Buying Own Car - India - YouTube
Channel: Asset Yogi
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Do press the bell icon while subscribing
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so that you get the notification of the latest finance video.
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Namaskar, my name is Mukul and welcome to Asset Yogi.
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Friends, cab services have improved a lot in the era of Ola and Uber
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you get a cab in a minute or two.
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A vehicle reaches your home.
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Wherever you want to go, it drops you there at the doorstep.
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So when the availability of cabs has improved this much
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so does it make any sense to buy your own vehicle on today's date?
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This is what we are going to talk about in today's video.
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See, there are two main aspects of buying your own vehicle.
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One is your financial aspect.
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Which we can call a quantitative factor.
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So, we will talk about it first.
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Second are your qualitative factors.
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Like safety and security.
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Any parking issue
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Or whether you want a driver or not
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So, we will talk about both the factors in this video.
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In the last video, we've seen how should you buy a car?
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We've seen a financial perspective.
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That how we lose a lot of money.
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And if we are able to save some money while purchasing a vehicle
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then how to invest it?
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So, if you haven't seen that video,
do watch it
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the link will be given in the description below.
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In that video, we've also discussed a point
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that if the cab services are too good on today's date
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then there's this option with you
to not buy a car as well.
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So, in this video, we'll elaborate on that point a bit more
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We'll see both quantitative and qualitative factors
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of cab vs own car.
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Stay tuned with this video!
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So see, the easiest way to compare is to find the per km cost of both
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overall it is very easy for Uber
In fact, I've checked today only
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On average, Ola or Uber costs you
Rs. 15/Km on today's date.
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Now, we've to do the same thing for our car
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if we are considering it.
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In this, we need two components.
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one is running cost.
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That means, how much will be the fuel cost per km?
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And second is the fixed cost.
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Means this car which you'll buy
plus its maintenance, insurance
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and interest cost
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That also we try to find on the basis of per km.
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Then we will be able to compare both of them.
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So see, If we want to find the running cost
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then we've to assume the mileage,
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here I've assumed the mileage of petrol car to be 14 Km/L
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I've assumed the petrol price to be Rs.70/L
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If we find the running cost with the help of this
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then the per km running cost of the car is Rs.5/ Km.
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Whichever car you are considering
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you can find its running cost too
in a similar way.
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So see, if your running cost is Rs.5 per km
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and if you subtract Rs.15 per Km from it
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So that means, your fixed cost should be less than Rs. 10 per Km
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than only this cart would be profitable.
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This car will only make sense when fixed cost is less than Rs.10 / Km
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And what is included in the fixed cost?
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first is the car's cost
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which you've to pay upfromt
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plus its insurance
plus its annual maintenance
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plus its annual interest cost.
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Now I've taken some more assumptions for this
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Suppose you are considering a car worth 6 lakhs.
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For that, let's say you take a loan of Rs. 5 lakhs for 5 years
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Let's say your interest rate is 11% p.a
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then your total interest payment will be Rs.1.5 lakhs for 5 years.
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See, here I've considered a car loan because
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I am assuming, you do not have upfront money in both cases.
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You are considering ola or Uber only because you don't have upfront Rs.6 lakhs.
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And you are not considering your own car also
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because you don't have upfront money.
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So it will be an apple to apple comparision.
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That's why we have to take an interest cost here.
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Here we are assuming that we have Rs.1 lakhs for the downpayment
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but we have to take the loan for the rest of the money. We do not have upfront money.
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And we do not have it in both cases.
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What other assumptions have I taken?
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I haven't considered pooling and sharing.
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If you share cabs then it costs you cheaper.
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But similarly, if you have your own car
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then you can do pooling in it too.
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I have not taken inflation in both cases because it will affect both.
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If you buy your own car then also petrol price will affect you
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so it will also increase in Uber or Ola's case.
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Insurance also increases in both cases.
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Maintenance also increases in both cases.
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That's why I haven't considered inflation here.
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Then I haven't considered driver cost as well.
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neither have I considered parking charges.
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In the case of own car.
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Generally, when people buy a car, they drive it by themselves.
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So I haven't considered that.
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And here, I've ignored parking charges too.
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If you want, you can consider and add it as well.
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So these were the assumptions.
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Now, let's move forward in the direction of finding the fixed cost.
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So, for a fixed cost, our target is, It should be less than Rs. 10 / Km.
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And what type of fixed cost will come into this?
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Our car price is Rs.6 lakhs.
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And here I am assuming its life to be of 5 years.
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So, resell price,
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we can assume that after 5 years, 50% depreciation took place.
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So, you would get a resell price of around Rs.3 lakhs.
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So, its effective price, in 5 years is 3 lakhs.
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So how much is the cost per year?
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If you divide 3 lakhs by 5, then you'll get a cost of 60,000 per year.
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What do we do here?
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We basically, divided 3 lakhs by 5 years.
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So you get your per year cost.
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Here, I have assumed the cost of maintenance per year to be Rs. 15000.
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See, 4000-5000 is spent in car's service only
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if we talk about a car worth Rs.6 lakhs.
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Service is done two times a year.
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And sometimes tyres are changed
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other issues also come
like AC stop working
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that's why I've assumed the maintenance to be 15,000 per year.
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I've assumed the insurance, on average, of 15,000 per annum.
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Apart from that, your interest cost or
the interest per year would be
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The interest was of 1.5 lakhs for 5 years
so what would be for a year?
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It would come out to be 30,000 for a year.
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I've divided 1.5 lakhs by 5.
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So your annual interest cost is 30,000.
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Now, what is your fixed cost per year?
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You'll add up all these things.
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60,000 + 15,000 + 15,000 + 30,000
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you got a fixed cost of 1,20,000 per year.
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So, if we calculate it for per month
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so the fixed cost of this car would be
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10,000 rupees per month.
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Here, I've assumed the life of the car is only 5 years
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But if you drive this car for 15 years.
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If you use it till its useful life
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See, the car's cost is 6 lakhs
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so resell, I assumed,
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The car's life almost ends in 15 years.
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So, I've assumed its resell value is 0.
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So here, your cost per year reduces.
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So here, your cost per year becomes 40,000.
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Here, we divided 6 lakhs with 15
so we get 40,000.
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I've increased the maintenance per year a bit
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because as the car gets older its maintenance also increases.
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So here, I've increased the average maintenance a bit.
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But, according to that logic, your insurance decreases per annum.
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So, if you see the average
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then see, maintenance plus insurance almost becomes equal.
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So here, I've taken the average of insurance as Rs.10,000 per annum.
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For 15 years.
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And here the cost of interest per annum will also decrease.
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Here, the payment of 1.5 lakhs, which we made for interest for 5 years
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Now we've divided it by 15 years.
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If you divide 1.5 lakhs by 15 then you get the interest cost as 10,000 p.a
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Now, if you'll calculate fixed cost p.a
then it is 80,000.
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And if you calculate fixed cost per month then it comes about to be around 6,500
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Here, you can see a common factor.
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This cost per year
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here it was 60,000
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and other than this
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All the other additional cost is also 60,000.
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In this case also, the car's cost is 40,000
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And the total of other additional costs is also 40,000.
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So, we can assume that
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the real cost of a car is 50%
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and the additional cost is also 50%.
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So whenever you calculate the cost of a car per annum
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add the additional cost in it as well.
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whatever the amount of the car is coming, add the same amount.
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So, now we got this fixed cost per annum
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If we are considering the life of the car as 5 years then the fixed cost is 10,000
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If we are considering the life of the car as 15 years then it is
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Rs.6,667.
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Now we have to find the fixed cost per Km.
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To calculate per Km, we've to assume how much distance the car will travel monthly?
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So it will depend on your monthly running.
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Let's assume your car travels a distance of 500 kms in a month.
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Then how much will be your fixed cost per km?
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What you'll do is divide 10,000 by 500 and you'll get the per km cost.
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So what is our cost?
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Rs.20 per km.
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This is the fixed cost if your car runs for 500 kms.
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What it will be for 15 years of life?
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Rs.13.33.
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It should be less than Rs.10 per km.
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It is more in both cases.
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So here, it makes no sense to buy a car.
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Let's see what hapens if your sunning is 700 kms
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What will be the fixed cost per km in this case?
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It will be 14.3.
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If you divide 10,000 by 700
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Here, in the place of 500, if it is 700.
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Here, in the case of 15 years, if we device 6,667 by 700 then it will be Rs.9.52.
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See, in this case, it has decreased.
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It is less than Rs.10.
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So, if we talk about 650 kms
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so the fixed cost comes lower than
Rs.10/ Km
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So we can consider that is is becoming even at 650 Kms
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if you are running the car for 15 yeras.
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If you run the car for 1000 km,
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then your fixed cost per km
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then it comes to be Rs.10/ Km in the case of 5 years as well.
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So this also gives you the break even.
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And ovbiously, it will also come less in this case too.
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So, we can consider that these two cases are break-even points.
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So we can say that, this car of Rs.6 lakhs
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only makes sense when its monthy running is greater than 1000 kms.
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If you run it for 5 years only.
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And if you drive it fir 15 years
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then your monthly running should be greater than 650 Kms.
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And if we talk about daily running
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if you drive for 5 years
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then your daily running should be greater than 30 Kms.
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If you drive the car for more years
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then your daily running should be greater than 20 Kms.
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So we have seen the quantitative factors
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that if on daily basis, our running is low than 20Kms
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then the Ola or Uber costs us less in today's date.
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But to buy a car is not a financial decision alone.
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You've to consider other factors as well.
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Like safety and security.
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Privacy
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How much luxury do you want in the car?
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Do you want a driver or not?
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Parking issues, breakdown issue
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So, let's see all these qualitative factors as well.
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So if we talk about qualitative factors
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First, let's see the advantages of our own car.
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You get more safety, security and privacy in your own car.
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Especially, if we talk about ladies,
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if you want to travel in odd hours then nothing is better than your own car.
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Ola and Uber are also giving nice safety nowadays
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but the safety in your own car is always better.
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You get more privacy.
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It is ready to use.
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If you want to go somewhere immediately in 2 minutes
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If there's some emergency, some urgency
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then you can use your car immediately.
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It is cost-effective if you have to travel a lot.
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As we've seen, if you have a travelling of more than 20, 30 kms/ day
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then your car is better.
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If you do short planned long drives.
If you've to go out of station
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You do not get ola or uber immediately.
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So, in that case, either you've to take a zoom car
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or there are options for other cars.
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But there's no comparision with our own car.
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In case of safety, security,
if you've to go somewhere suddenly
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if it is shortly planned.
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In that case, your own car is better.
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Customization and luxury are better.
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You can customize your car whichever way you want.
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You can add stereos to it. You can apply sear covers.
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You can do whichever modification you want to do.
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And whatever kind of experience you want, you can modify your car according to that.
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You can leave stuff in the car.
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If you go to the wedding and you have something with you,
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you can leave it in the car.
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If you are going shopping, you can leave stuff in your car.
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If you are going to meet someone, you can leave your laptop in the car.
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So these all are the advantages of your own car.
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On the other hand, there are different advantages of Ola, Uber or any cab.
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You don't have to drive.
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You can do your work while travelling.
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And if nothing, you can relax.
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There's no issue with parking.
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Wherever you are going, especially to the place where there's a problem with parking
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where you do not get parking easily
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So your time is not wasted.
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You do not have to find the parking. There's no hassle of any kind.
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And less travelling, as we have seen,
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if your daily running is less than 20-30 Kms then cabs are cost-effective.
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There's no issue of breakdown.
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If your cab gets damaged, you can change the cab and reach your destination.
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But if your own car breaks down, then your many hours are wasted in that.
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There are many hassles. You have to repair the car.
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There's a lot of issue in drink and drive.
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You can welcome challans if you drink and drink your car.
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There's no such issue if you take a cab.
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There's no waiting at fuel stations.
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If it's your own car then you have to wait at the fuel stations.
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There's no such waiting in the cab's case.
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Whether we should buy our own car or we should be dependent on a cab?
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I've tried to cover all the major points regarding this decision in this video.
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Still, if any point is possible which can help us in this decision
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and which is not covered
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do let me know in the comments section below.
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Other viewers will also be benefited from this.
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If you liked this video, then do like and share it.
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I believe, your friends and family should also be benefitted from this.
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And if you haven't subscribed to this channel yet
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then do subscribe to it from below and press the bell icon on your phone
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so that you get the notification of the latest video.
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So see you in the next finance-related informative video
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Till then keep learning, keep earning and be happy as always
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