Tuesday, March 27, 2012

Buying vs renting car- my calculations

This is continuation of my previous post on Buying vs Renting a car

June 2008 was the first time I ever rented a car on self drive. Took the keys of Skoda Octavia from Carzonrent staff in Chennai and I was all excited about overnight drive to Mysore. Read more about it here.

I maintain an album in my facebook profile, of every car I drove on rentals. In past 4 years, I've rented cars about 20 times.That is about 5 times an year or once in 2.4 months. Each rental has been of duration ranging from 1 day to 5 days, costing between Rs 1500 per day to 4400 per day.

Some of my friends say that I could have bought a car directly, instead of renting one every few months. To evaluate this and see if I would have saved in case I had bought a car instead. I am sharing these calculations and thoughts with you.

I did a rough calculation. I've spent about 1.1 lakh rupees over these 20 rentals (about 42 days, averaging 2.7k per day or about Rs 5600 per rental.) Fuel cost extra.

Was I stupid in spending 1.1 lakh on rental? Should I have used it as down payment and purchased a car instead?
I feel I was right in not buying a car. Following points are supportive of this:
1. Of the above 20 trips, about half of them were done with friends. Rental expense was shared among friends, so my share was usually one fourth to one sixth of the amount. If it was an owned car, I couldn't have asked for rental share. Only half of these were done with family where I had to pay entire share.
2. I got to try wide range of vehicles. No way I could have afforded to buy an Endeavor or Innova
3. I saved on insurance and maintenance. If I had purchased a 6 lakh car, I would have been spending about 15k per year on insurance and another 10-20k on servicing. This amount alone adds up to 1 lakh in 4 years
4. I saved on unnecessary driving. I could take a train to Bangalore and rent a car from there. If I had owned one, I had to drive it till Blr and back, another 3k worth fuel and toll wasted, along with a night's sleep
5. If I had bought a car at 6 lakhs 4 years ago, I would have spent about 9 lakhs by now (1.5 lakhs in interest, 1.5 lakhs in insurance, repair, maintenance) and car would have had a resale value of 4.5 lakhs
6. I could rent bigger vehicles and carry 6-8 people. Not possible in a small car
7. Not owning a car has its own advantages- I needn't worry about parking space wherever I go, I needn't suffer the temptation of taking the car out even for simple task like vegetable purchase, I don't have to keep worrying about someone damaging the car, I don't have to drive people around. I don't have to worry about my car getting outdated, looking at newer models on road. Using my bike saves me lot of fuel, time.

What do you think? I am being stupid? Should I plan to buy one instead?

Related: Self drive rentals in India * Wayanad in Scorpio * Etios Review * Zoom Bangalore self drive review * Read this before buying an SUV * SUV purchase- Financial calculations * Chennai-Mysore in Skoda * BMW 320d *


Gowtham said...

Your calculation is right economically that too if you consider only long (mostly) planned trips. But convenience-wise, I don't think so.

Mitesh Damania said...

I never felt so free in India. Stepping out the flat and into a rickshaw was so convenient and without the overhead. Not only do I not have to drive, but I don't have to maintain the vehicle or fuel it. Driving a car in the US is a chore. Shopping for car insurance and then looking over the insurance document every year to see how they're screwing you, oil changes, tire changes, brake changes, windshield wiper changes, getting out to refuel, watching out for the police when speeding, and lastly, FINDING PARKING.

Mitesh Damania said...

And who doesn't want to try out different vehicles? That's so fun to compare and contrast your vehicle to others. Also, the rental vehicle is nearly new.

ವಿ.ರಾ.ಹೆ. said...
This comment has been removed by the author.
ವಿ.ರಾ.ಹೆ. said...

I was planning to buy a car, but this calculation ruined that :)

Just for curiocity, Are u married?! :)

Aravind GJ said...

Depends on the use case. While it is always hard to get back the money invested on car (Unless it is put on hire), we should look at the convenience it offers. Especially when you do unplanned trips, travel with family and luggages and local travel.

Unlike in the west, renting car in India is not hazzle free. Just to try, I went to carzonrent and try to rent a car online. After filling all details, I see a pop up that for "self drive" booking I need to contact respective branch. Things might change in future.

Ramakant Pradhan said...

Depends on the nature of one's work and how much time they spend on the road. In India, the market for rentals is not exactly on the bloom. Though its much better than a few years back. Still getting a driverless vehicle is not a painless process. At least, not in most places that I have been to. Hopefully, we will get to soon see a more conducive environment for rentals similar to what we have in developed nations like US. But then, maybe by that time, a car would have become a necessity for everyone.

Shrinidhi Hande said...

Ramakanth, yes not many agencies exist for self drive rentals and process is different at each agency. Hopefully it gets better

Aravind: hertz needs us to go to their office during day time and collect the vehicle. Due to increased risk, they dont accept online payment, they don't do delivery and collect. Try

Yes, with a family having car at disposal makes sense

Vi.Ra.He: :) Yes

Mitesh: Fully agree

Gowtham: Yes, with a family having a owned car will be more convenient

Deguide said...

Srinidhi, i believe that is an interesting take. As one heads for retirement it is a good option to give up all the frills. Commuting in a city without seemless transportation is a real pain. Own car or bike depending on one's budget is necessity. Secondly rotation of cars can be undertaken with friends too. Finally a mix and match of hiring vehicle in tourist spots by travelling by train or air can be resorted even if one owns a car. Of course wear and tear and maintainence is a big drain plus resale value will go down day by day. After 3 years one should be lucky to even get 50% value or original cost

Shrinidhi Hande said...

Umesh Sir,
Yes. Once you buy a car, you need to keep spending on it

Anonymous said...

Also consider the 2-3 lakhs that you will save by not having a reserved parking space while buying an apartment ;-)

Shrinidhi Hande said...

That is a good point