Wednesday, 6 September 2017

Renting A Cab Vs Buying A Car, which is more feasible?

Owning a car has always been a mark of pride in the Indian society. It gives us emotional gratification apart from the freedom to travel whenever and wherever we want. But off late, traffic snarls (especially in the big metros) are making driving a nightmare. The hassle of manoeuvring through the dense traffic and hunting for parking spaces is pushing people to look for alternate options. The advent of app based cab services like Ola, Uber, Meru etc. is proving to be a solution to most of these inconveniences. These cab services are slowly changing the way people travel. One can travel through the city without any hassles at a reasonable cost. So now many consumers are juggling with the question of whether one should buy a car or rent it out on need basis.
Firstly one needs to consider whether buying is really an option. To own a car you either need to provide funds yourself or rely on a car loan. In case you already hold a home loan or an education loan, you may not be eligible for any further loans. Your income may not be sufficient to cover for a new loan after paying the old EMIs on your existing loans. CIBIL rating also plays a major role in car loan approvals. If your CIBIL score is less, you may find it difficult to qualify. In such cases renting a cab may seem to be a more feasible option. But let’s say you can afford to provide funds yourself, or your CIBIL rating is high enough for an approval. In such a case how do you make a choice?
Let’s look at some factors that help us to compare the pros and cons of both these options.
1. Cost- Needless to say one should do a comparison of the cost structure of owning a car vs. hiring it, over a specific period of time, and see which one works out to be cheaper. Most people rely on a car loan to finance the car. So apart from the price of the car, one needs to factor in the car loan interest rate that one pays over the loan tenure. Also take into consideration that car is a depreciating asset.  Cost of fuel, Annual premium for insurance, maintenance cost, driver’s salary, parking charges are some other expenses that one needs to add to calculate the cost of purchasing one’s own vehicle. Buying a car certainly puts pressure on one’s liquidity position. Compare this with the per kilometre charges you pay for renting. Also consider the surge pricing charges that are sometime levied by cab service providers.
If one looks at the costs involved, the cab services are surely tilting the balance against buying a car. Though these cost comparisons will depend on the distance travelled, but surely it will be much more economical to hire a cab if you do not commute daily or travel short distances. But there are times when emotions overtake the rationale of an individual. For some, car is not just a mode of transportation. It is matter of prestige for them, as they use them to project their lifestyle. Moreover, hiring a cab cannot match the excitement, joy and thrill of owning your own car.
2. Flexibility and ease- If you have a fixed travelling schedule then relying on cab services makes sense. After all it frees you from worries of maintenance and depreciation. However, with cab services there may sometimes be uncertainty of availability when you need it urgently. Sometimes lesser cars may be plying during a strike or a rainy day, which may cause inconvenience. As against this, a self-owned car provides convenience in case of emergencies.  It frees you from the hassles of waiting for the cab. There is peace of mind that you can travel as per your suitable timings.
3. Safety- With rising cases of misconduct by drivers, people have started believing that it is always better to drive your own car, than hire a cab, especially for women. Driving your own car is being considered as a much safer option.
4. Time- If you do not have a driver, then driving to and fro office 2-3 hours a day in your car may seem like wastage of time. Driving during rush hours can become a nightmare. While in a hired cab, one can have a relaxed journey and save a lot of time. Sitting at the back seat one can utilize the time productively by catching up with office mails or personal calls.
Ultimately it all boils down to one’s priorities, needs and travelling habits. Hiring a cab service will definitely be lighter on your pocket. But if you value safety, convenience and independence more than money, then owning a car is the best choice.

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