We have entered an age where owning a car has crossed a thousand miles from being a need of a family. The sense of having a car is no more a necessity, it is a status symbol. One can easily observe somebody who just got a job, thinking to buy a car or someone who already owns one planning to change his car within a year or two of buying it.
We cannot deny the fact that our purchasing power has increased and we, on an average level, are more capable to buy costly things and luxuries. Buying a car, however, should be last on your list when you plan to expand your assets.
In this article, we discuss a few important points that justify a car being one of the last acquisitions for a common man.
1. No value creation: As soon as your car rolls out of the showroom, its value is depreciated by at least Rs. 50000 without any wear and tear. The money you have invested in getting a car has just got undervalued in 5-10 minutes of taking the delivery. There is no value being created in purchasing it, but several liabilities automatically are put on you, the owner’s shoulders.
2. No Tax Saving over Loan: When you purchase a house or construct one and opt for a loan, you are welcomed by the economy and government’s offer of deduction in income tax. The same does not apply when you buy a car. You would get any tax rebates neither over principal nor on interest paid.
3. Maintenance and Insurance: What hurts more your pocket than buying a car is its maintenance. Regular servicing and insurance tend to show their real burden after the warranty and free service period has expired. Insurance, being compulsory, hits hard once a year. As far as maintenance is concerned, regular servicing, spare parts, oil, cleaning etc. does wipe out a good chunk of your income from time to time.
4. Rent a Car, Cab and public transport: Uber, Didi, Ola have given a top class passenger experience through their air conditioned, well maintained cab service. Further, consistent increase in public transport quality and class also tends to make one think about the reason to purchase a car.
For longer trips and holidays, you can always rent a car via ZoomCar, Hertz etc and take a clean, insured and healthy car for a ride. When analyzed it is quite clear that you get to pay only for the time you are actually using the car and there is no need to pay any heed when you are not using the car. There is no maintenance needed, no theft issue is going to bug you, no spare part or servicing to bother you.
Availability of public transport and cab services that touch extreme luxury is also a reason to make you think about purchasing a car.
Giving less priority to buying cars in your list of asset acquisition is a justified point as there are assets like property, gold which do demand high investment like in vehicles but then compensate with increment in value and worth. Unlike cars, there is a rare chance that you can find alternatives to gold and owning a house.