The joy of owning a car, whether a house or a car, disappears when paying EMIs. Therefore, whether it is a house or a car, if you buy it after knowing clearly your salary, savings, and how much EMI you can pay per month, it will not cause any financial impact on us.
Buying a car is not a one-day expense. It comes with many expenses that will continuously affect our income. Therefore, some important financial matters must be considered before buying a car.
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Monthly Installment is Not Enough!
Don't just look at the price of the car, calculate the monthly EMI and its interest, and find out if we can pay it properly every month. Market experts have said that buying a car through EMI is a good option only if at least 20% of the monthly income is saved. If you can't save 20% of your salary every month, it's best to postpone buying a car.
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Insurance is Mandatory
Car buyers have to spend an amount annually for insurance. Although this is an important expense, it is mandatory to do it annually. Since the insurance premium has to be paid annually, it can cost Rs 10,000-Rs 15,000 for 1500 cc cars. This is an unavoidable expense.
Petrol and diesel have the power to reduce the joy of always driving a car. Since additional expenses will be added to our monthly budget when we spend money on petrol and diesel every month, it is good to buy a car after calculating it. On average, if you drive 1,000 km per month, petrol/diesel will cost up to Rs 10,000 based on the price of petrol. Market experts say that you should buy a car only if you have a salary that can handle petrol and diesel expenses.
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Amazing Maintenance Costs
It is no exaggeration to say that the maintenance cost of a car will amaze you more than paying EMI for it. It should be noted that the maintenance cost will be at least Rs 15,000 - Rs 25,000 per year. Tires, spare parts, etc. will have to be replaced over time. If you know this before buying a car, you can make the right decision about whether to buy a car or not.
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Additional Costs
It is important to know that parking, toll and other expenses will definitely be one-fourth of the EMI amount, more than maintenance and petrol expenses. There is a possibility of additional expenses up to Rs 2,000 per month for parking and toll charges alone.
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Driving Weekly?
If you confirm whether you are going to use the car daily or only occasionally to go to town, you can decide about buying a car. If you don't use the car every day, you can use Ola/Uber or rental cars. Doing so will not affect you with maintenance issues, insurance, interest, etc.
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Used Cars?
Instead of new cars, used cars in good condition can be available at a 50-60% discount. But even though the maintenance cost is high, the resale value will be low. When buying used cars, the EMI will decrease and the investment will be less, so you can reduce the financial expenditure by buying second-hand cars.
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Who Can Buy a Car?
Only those who have twice the car EMI amount in hand should buy it. Rental vehicles are the best choice for those who travel once a week. Don't buy a car for prestige. After buying a car, you should not get into trouble by spending with a credit card.
Before buying a car! Certainly, a car can be an important asset for convenience and preference. However, buying a car will not affect your finances only if you have at least 20% savings in your income and have a need to travel multiple times a week. Otherwise, rental cars are the right solution, say financial advisors!
