Sumit and Karunesh did their graduation from the same engineering college and after campus placement got placed in the same software company. So, they rented a house together and used to commute together in an Uber or Ola cab to their office but after a few months, Karunesh decided to shift to a new flat. After one year of his shifting to the new address, Karunesh also decided to buy a car for himself and got himself a fine hatchback that he would drive everyday to office. Sumit, on the other hand, continued commuting in cabs. Even after several years, with salary hikes, bonus and incentives streaming in, Sumit did not buy any car. He did buy his own flat and invest in some other financial schemes but car was something he avoided altogether.
Karunesh too bought a house but after five years, the car Karunesh had bought began experiencing troubles. Miffed with the recurring expenses on repair and the old model, he started considering the sellout of his hatchback and buying a new car, a new model. Ultimately he decided to get a new one but he was short of money and so, he approached Sumit to lend him the money as he did not want to take another automobile loan. Sumit readily agreed, leaving Karunesh intrigued about his friend’s savings.
So, he asked him how had he managed to save so much and Sumit replied that it was all because he did not buy any car. He told Karunesh that the savings were a result of his Ola/Uber cab rides. Karunesh could not believe his ears but had to after Sumit explained the maths of his savings and he was so impressed with Sumit’s saving strategy that he shunned the idea of buying a new car and went back to taking cab rides as he used to years before.
Well, if you are also in two minds and debating between buying a car or taking Ola/Uber rides then you have to take a look at the economics of the two options. If you analyze carefully, you will also find that the latter is a better option. This is how. An average car in India costs around Rs 6,00,000 and after six years its scrap value stands at Rs 1,00,000(considering avg. 20% depreciation cost), which means that the net amount that goes into the effective life of the car in these six years equals to Rs 5,00,000. So, if one has to calculate the net amount per day then it comes down to Rs 230 (5,00,000/2200 days).
Add to this the petrol expenses, insurance, maintenance, battery & tyre change expense, driver’s salary and interest loss on buying car. The daily petrol expense is taken to be an average of Rs 100 per day. The insurance premium stands at Rs 41 per day (yearly premium taken as Rs 15,000) while the maintenance is Rs 25 per day (yearly maintenance charge taken at Rs 9,000). The driver’s salary per day comes down to Rs 300 per day (monthly salary Rs 9,000) and the battery and tyre change cost comes down to Rs 23 per day (calculated as Rs 25,000 after 3 years i.e. 50,000 after six years). Lastly, the interest loss on car purchase is Rs 131 per day (calculated on Rs 6,00,000 @ 8%).
When all these daily expenses are added, the gross total adds up to Rs 850 per day (230+100+41+25+300+23+131) which is quite huge in comparison to Uber/Ola rides. Majority of those who commute daily spend less than Rs 850 on their transportation. Most importantly, there is no parking hassle that you have to face in case of Uber/Ola cab. You just book a cab and it is there at your beck and call. So, until and unless you are paying Rs 850 per day on cab rides, you are in a gainful position if you do not take the personal car route.
You stand to save a good deal by choosing not to have a car and since financial planning demands savings from an early age, it makes sense to save on commuting. Uber and Ola are truly commuter friendly and with the pooling option also available, the rides are even more pocket-friendly translating effortlessly into more savings.
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