Personal Finance Management

Objective of the Video

• To understand whether you should buy a car or take it on rent.

Key Learning from the Video

Let’s discuss how to decide between buying a car using the following example:

For example The cost per km of a self-drive car

• You plan to buy a Honda City worth Rs. 12 lakh.
• Monthly EMI for a 5-year loan of Rs. 12 lakh is Rs. 24,000.
• Monthly insurance and servicing expenses are Rs. 2,000 each (Rs. 24,000 annually).
• Monthly expenses for the car are Rs. 28,000 without considering repairs or petrol costs.
• Assuming Rs. 1,000 monthly for wear and tear, the cost comes to Rs. 7.50 per km, considering a 12 km/liter mileage.
• The total monthly expense on the car is Rs. 36,500, with a cost per km of Rs. 36.5.
• Hiring a driver for Rs. 15,000 per month increases the cost per km to around Rs. 52, while OLA & UBER charge Rs. 7-12 per km.
• Using OLA & UBER can save Rs. 40 per km, approximately Rs. 40,000 monthly, which can be invested in mutual funds with an expected 12% return per year, resulting in a profit of around Rs. 10 lakh.

If you are young and frequently switch jobs between locations, using OLA/UBER instead of buying a car is advisable.

For example:

• Singapore relies on public transportation, promoting a culture where even millionaires use public transport.
• A Swift Dzire costs Rs. 8-10 lakh in India and Rs. 35-40 lakh in Singapore due to the emphasis on public transport.
• Consider developing a similar culture to save money and benefit the environment.
• Ultimately, focus on completing tasks rather than being tied down by car ownership, considering a car as a liability, not an asset.

Key Outcomes of the Video

• Consider cost per km when deciding to buy a car.
• Use OLA/UBER if you are young and frequently switch jobs.