Trains are the lifeline of Mumbai. It is spread across 465 kilometres, operates 2,342 trains and carries more than 7.5 million commuters daily. It is one the busiest commuter system worldwide and suffers serious overcrowding.

Hence, the common man faces a huge problem commuting in the trains and busses during the peak hours. Even expecting for a place to stand could be a lot to ask for. Moreover, water clogging on the rail tracks during the rainy season not only causes delay in commuting but also brings the mammoth service to a screeching halt.

Like most cities, braving the traffic and arrogant taxi and rickshaw drivers can be an ordeal for anyone. Though private taxis are available, however, they lack transparency in pricing. Availing of their services often can be a big pinch on one’s savings. Buying a car is the best option for frequent travellers who want to avoid the tribulations of local trains and taxis.

With the entry of professional cab aggregators (Ola and Uber) in the last few years things have changed. These aggregators offer competitive pricing and the best of chauffeur-driven cars. All you need to do to book them is use their mobile application, and the cab is available in less than 30 minutes.

The dilemma most frequent travellers’ face is buying a car or availing of these on-call taxi services. In this article today, we play the devil’s advocate to assist you in arriving at a decision!

Here are some benefits of owning a car:
 

• You learn critical finance principles: First is starting to budget. Maintenance charges, insurance, fuel, repairs, etc. But before you jump for it, know that excess debt is toxic. ‘Live within your means’ is the best financial mantra.
   
• Convenience: It’s your car and you can use it without being at the mercy of these services. You may not find one during peak hours or on rainy days. Who wants to pay more during peak hours (surge pricing)? Moreover, the aggregators reach is predominantly within Tier 1 cities.
   
• Long Drives: Nothing can replace the joy of taking family out on long drives or a road trip to your favourite destination at the drop of hat. The freedom a self-owned car provides is unmatched.
   
• Groceries/Shopping: This sounds a little off the line, but have you experienced the ordeal of being unable to hail down a rickshaw when your hands are full of groceries you just bought? The situation gets even more frustrating during the monsoon, doesn’t it? Haven’t you wished you owned a car? ?
   
• Cost over the long run: In the long run, if the car is in good shape, the cost of owning a car definitely outweighs using the services of an aggregator.
   

Now here are a few benefits of using a professional taxi service aggregator:
 

• Parking: It is a driver’s nightmare. Finding a place to park your car is a huge pain in Mumbai. It takes a lot of time to find a spot to park. If you don’t own a car or prefer to use a taxi aggregator, you avoid this ordeal.
   
• Depreciating Asset: A car, no matter which you buy, is a depreciating asset. Why block your money? Instead rent a car and invest the same in an appreciating asset.
   
• Maintenance, Insurance and other ancillary charges: By not owning a car, you end up transferring the burden of the running cost to the aggregator and fund other important areas of life instead.
   
• Frequency of travel: The decision to buy a car significantly depends upon the distance and frequency you travel. If you travel short distances and don’t have heavy use of it, then you are financially better off without owning a car, as shown in the example below:
   

Cost of Owning a Car over 5 years
Parameters		Workings	For Office Use (Rs)	For Office Use (without driver) (Rs)	For Discretionary Use (Rs)
FIXED COST (Approx.)	On road price of - WagonR 1.0 Lxi (at Mumbai-Western)		486,509	486,509	486,509
	Down payment		64,000	64,000	64,000
	EMI (loan amount Rs 3,65,812 at 10.5% for 60 months)	Rs 7,863 x 60 months	471,780	471,780	471,780
	Insurance	Rs 17,000 x 4 years	68,000	68,000	68,000
	Salary to Driver	Rs 12,000 x 60 months	720,000	-	-
VARIABLE COST (Approx.)	Maintenance Charges	Rs 15,000 for office use & Rs 7,000 for discretionary use	75,000	75,000	35,000
	Parking Charges	Office Use: Rs 9,600/year & Discretionary: Rs 400/year	48,000	48,000	24,000
	Fuel Cost (Office distance - Borivali to Nariman Point to 45 Kms, one way)	Rs.65/litre. 5 days a week working and 150 kms on weekends.	468,000	468,000	146,250
	Miscellaneous Charges		20,000	20,000	20,000
	Total Cost		1,934,780	1,214,780	829,030
	Less: Resale Value of the Car		150,000	150,000	200,000
	Net Cost		1,784,780	1,064,780	629,030
	Cost of using Uber/GO (over the same distance and over 5 years)		1,533,600		360,000

(Note: The above table is for illustration purpose only)
(Source: PersonalFN Research)
The above table highlights the cost of owning a car versus using an aggregator for travel over a 5-year period. Although the table is not a definitive doctrine on whether one should buy a car or not, it gives a broad overview, based on certain assumptions.

It depends on one’s outlook towards the benefits and it is a personal decision where there are no set standards. Though the argument varies from person to person, we have tried to list down the pros and cons of both scenarios.

We would like to hear from you. How would you evaluate the same situation? What prompted you to buy a car or decide otherwise?

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Comments
parimalshah1@gmail.com May 03, 2016 In the above example you may also consider comparison with Wagon-R CNG model. The cost of running that car, even for a shorter distance will be less and the cost of aggregator will be higher. Also,everyone may not buy car on loan. So you need to consider the cost of capital only.

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