Economical Car Ownership: Which is Best for You

Mark Sanyal FEATURES Leave a Comment

In the post-lockdown period, incomes have reduced and people are looking to make the most of what they spend. In parallel, owning your own car has emerged as the safer way to commute to avoid exposure to the COVID-19 virus. At first glance, committing to owning your own car appears to be an expensive proposition. With the additional burden of choosing the appropriate ownership model, it can be difficult to properly gauge the total costs of owning a car.

A number of ownership models exist in India, where you can choose to either buy a brand new car, buy a used car, or subscribe to a car. Each of these ownership models has its own associated costs of ownership and each of the models is suited to a particular need. There are a number of costs involved that you will incur throughout your ownership period.

With a liquidity crunch facing many people, considering the overall costs of your ownership could be the deciding factor in purchasing a car or subscribing to one. The introduction of the Spinny Buyback programme provides an assurance of future resale value of the car. This assured future value further reduces the total cost of ownership to be paid by you. With used cars becoming even better value propositions for short-term ownership with the Spinny Buyback programme, a comparison against car subscription and buying a new car is warranted.

Also Read: Spinny Used Car Buyback Programme

We will be comparing the cost of ownership of buying a used car with Spinny Buyback against subscribing to a car to reaffirm the value proposition we mentioned in this article. We will also be comparing the cost of ownership of buying a used car with Spinny Buyback against buying a new car today.

The Comparison Constants

In order to compare the three ownership models fairly, the comparison will be based with one car model being constant. For the purposes of this comparison, we will be using the Hyundai Elite i20 that is available on Spinny and on all car subscriptions. Taking into account the nature of use in car subscription services, the car we have chosen is also a relatively lightly used 2015 Hyundai Elite i20 Sportz valued at ₹5,34,000. The calculations and analysis below are applicable on cars valued higher and lower. However, it is still important to note that the total cost of ownership will depend on the model, the purchase price and the associated buyback price. The following cost of ownership is still representative of the Spinny Buyback programme as a whole.

Also Read:  5 Cars with the Best Resale Value in India

Spinny Buyback vs Car Subscription

Car subscription models have emerged as an attractive way to drive your own car without the additional burden of maintenance charges and insurance. Subscribing to a car is seen as a good option for those looking to drive a car for a month or two but most car subscription services offer longer subscription tenures that go up to a maximum of 24 months. It is the longer term car subscription models that we will be comparing against.

Premium Hatchback

Spinny Buyback (Car Price: ₹5,34,000)

Car Subscription

Buyback Value

Monthly Cost of Ownership

Additional Charges

Total Cost of Ownership

Monthly Cost of Ownership

Total Cost of Ownership

6 Months

₹4,13,000

₹20166

₹0

₹1,21,000

₹19,800

₹1,18,794

12 Months

₹3,84,000

₹12500

₹10741

₹1,60,741

₹19,100

₹2,29,188

18 Months

₹3,65,000

₹9388

₹4750

₹1,73,750

₹18,500

₹3,32,982

In addition to the purchase price and buyback price, we must also consider some of the additional known costs that come with owning a car. Insurance and maintenance costs have to also be taken into account. Similar costs are not readily available for car subscription services, so the cost of ownership will be based on the price quoted for the respective periods of 6, 12, and 18 months for the purposes of the comparison.

Total cost of ownership compared between  Spinny Buyback and Car Subscription.

As can be seen, the total cost of ownership comes out to be in favour of owning a used car with Spinny Buyback. The reason this is possible is due to the assured resale value you get with the buyback programme. When it comes time to return the car back to Spinny, the additional costs of insurance and maintenance are absorbed in the assured buyback value you receive.

Additionally, while our calculations only take into account the monthly cost of subscription, there are additional charges such as extra rental charges and taxes could easily push the total cost of ownership even higher. These charges are variable based on your usage and are calculated at the time of returning the car. With this comparison, it is evident that apart from owning a car for just a month or two, buying a Spinny assured car with Buyback will provide an overall saving of ₹68447 for 12 months of ownership and ₹151964 for 18 months. These savings can easily be invested in other avenues that will work for you in the long term.

Also Read:  All You Need To Know About The Chinese 'Tesla-Killer' - The LeSee

Spinny Buyback vs Buying a New Car

When it comes to buying to own, deciding on whether to buy a new car or a used car is a question that always comes up. Depreciation becomes a major factor to consider when buying a car to own as it directly affects the future resale value of the car. While depreciation for cars is set at around 10% every year for 5 years of ownership, other subjective factors such as market demand and brand reliability become contributing factors that reduce resale value.

Calculating the cost of ownership of a new car requires us to consider the inherent loss in value due to depreciation over a two year period in addition to the maintenance, insurance and loan costs. For a used car with Spinny Buyback, only maintenance and insurance have been included as we mentioned that most of our customers choose to buy their car by paying in full rather than finance the purchase. One factor to note here is that maintenance costs are higher for used cars as they age while insurance costs are higher for new cars due to the higher Insured Declared Value (IDV).

6 Months of Ownership

12 Months of Ownership

18 Months of Ownership

Costs

Used Car

New Car

Used Car

New Car

Used Car

New Car

Depreciation

₹121000

₹41800

₹150000

₹125400

₹169000

₹167200

Loan Interest

₹15320.5

₹30641

₹15320.5

Maintenance

₹5912

₹34500

₹4750

₹32400

Insurance

₹4829

₹2714

Total Cost

₹121000

₹57120.5

₹160741

₹193255

₹173750

₹261120.5

In the table below, we are comparing the total cost of ownership for the periods of 6, 12, and 18 months. We have not included maintenance and insurance costs for 6 months of ownership as both are yearly expenses that are accounted for in 12 months of ownership. On the other hand, we have included the additional cost of insurance in 18 months of ownership as that is an expense that usually takes place at the beginning of the year.

Total cost of ownership compared between Spinny Buyback and buying a New Car

A new car does retain its value after 6 months of ownership. The car is as good as new and the low cost of ownership is a result of the almost negligible depreciation. After 12 months, the depreciation and the loan interest starts to increase the total cost of ownership of the car. The cost of ownership of a used car with Spinny Buyback and a new car after 12 months of ownership is almost the same, apart from the loan interest payment. After 18 months of ownership, the cost of ownership favours buying a used car with Spinny Buyback as you can save ₹87370.5 compared to owning a car for 18 months.

Also Read:  6 Best Compact Sedans in India 2016 : Sub 4 Meter Powerhouses

The key to comparing the cost of ownership between a new car and used car, depreciation is a very important factor that decides what your cost of ownership will be after 12 or 18 months. As the resale value can be impacted by depreciation, a programme like Spinny Buyback becomes an essential tool to make owning a car for the short term affordable and secure.

Conclusion

As we’ve demonstrated, owning a car with Spinny Buyback provides immense savings to you. When it comes to owning a car for a year or two, having the assured buyback value, along with a 1 year warranty, makes the purchase even more secure for the short-term. Of course, the cost of ownership will differ between cars, where the difference could be lower or greater.

In these financially restricted times, having financial freedom while also being able to own a car to fulfil your needs has become a necessity for many. Spinny Buyback gives you better savings that improve your financial security, so you can focus on the important things in life.

Leave a Reply

Your email address will not be published. Required fields are marked *