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Is it Better To Rent a Cab Or Buy a Car?

car vs cab
(source:indiatimes)

Currently, the easy accessibility to app-based cabs at fingertips can thrust individuals to dilemmas concerning which is more economical between buying a car and taking a cab. Both these options have advantages and disadvantages, and getting a conclusion can be challenging.

Here is a detailed discourse to help individuals decide whether to buy a car or hire a cab. Keep reading to decide which one is the best choice for you.

Buying a Car or Taking a Cab - Which Is More Cost-effective?

Wondering if it is better to rent a car or buy one? The best answer can be derived from calculating the cost of utilising this private and personal transportation. 

Follow this approximate tabular comparison to get a clear idea:

Particulars

Cost of Buying a Car

Cost of Taking a Cab

Price of an Entry-level Car

Starts from ₹ 6 Lakhs

Starts from ₹ 1,000 per day

Travel Cost (Daily for 50 km, monthly 1500 km)

₹ 5,38,680 (For 5 years)

₹ 13,23,000 (For 5 years)

Maintenance Cost

₹ 1,00,000 (For 5 years)

₹ 0 (For 5 years)

Insurance Cost

₹ 90,000 (For 5 years)

₹ 0 (For 5 years)

Approx. Total Ownership Cost

₹ 13,28,680 (After 5 years)

₹ 13,23,000 (After 5 years)

Tentative Resale Value

₹ 3,00,000 (After 4-5 years)

₹ 0 (After 4-5 years)

Money Investment After 5 Years

₹ 10,28,680

₹ 13,23,000
The calculations and estimations considered in the above-mentioned table are explained below.

For Cars

1. Travel Cost

Diesel cars offer a mileage of around 15 km per litre. If the diesel price is ₹ 89.78/litre**.then for a monthly average travel of 1500 km for 5 years, total fuel cost would be -

Average diesel requirement to travel 1500 km = 1500 km/15 kmpl = 100 litre

Total diesel price = 100 X ₹ 89.78 = ₹ 8,978 per litre

Then, cost to travel 1500 km for 5 years = ₹ 8,978 X 5 X 12 = ₹ 5,38,680 (1 year = 12 months so 5 years = 5 X 12)

**Note - ₹ 89.78/litre was the price of diesel in Kolkata on 18.01.2022. Oil prices are subject to change and also may vary from place to place accordingly. Further, this is just an example and varies with petrol, electric and engine cars.

2. Yearly Maintenance Cost

Suppose, a car’s yearly maintenance cost is ₹ 20,000. Then, the maintenance cost for 5 years would be ₹ 1,00,000.

3. Insurance Cost

If the insurance cost is ₹ 18,000 per year, then 5 years of insurance cost would be ₹ 90,000.

4. Total Ownership Cost

Cost of the vehicle  = ₹ 6,00,000

Total fuel cost for a 5 years = ₹ 5,38,680

Maintenance cost  for 5 years = ₹ 1,00,000

Insurance cost for 5 years = ₹ 90,000

Adding them up you get total ownership cost.

₹ 6,00,000 + ₹5,38,680 + ₹ 1,00,000 + ₹ 90,000 = ₹ 13,28,680

5. Resale Value

Depreciation value of cars aged 4- 5 years = 50%. Then, for the original value of ₹ 6 lakh, car owners would get ₹ 3 lakh after 5 years.

6. Money Invested After 5 Years/Real Cost of Owning a Car

₹  13,28,680 - ₹ 3,00,000= ₹ 10,28,680

For Cabs

Total Rate

If the per km cost of Uber is  ₹ 14.7, then for a monthly distance of 1500 km for 5 years, the cost would be equal to ₹ 13,23,000.

Note: Charges like late-night fees and surcharges will add to this cost of renting a cab as per requirement.

From the above discussion, individuals can get a clear idea about the cost-effectiveness of buying a car and renting a cab. Next, let’s focus on the convenience of opting for personal and private transportation.

Buying a Car or Hiring a Cab - Which Is More Convenient?

The answer to this question depends on users and their travelling patterns. If individuals need to travel a long distance every day to reach the office, it would be better to purchase a car. The demand for cabs during rush hours is high, and it can take much time to coordinate with the driver and wait for the vehicle to arrive. In addition, the prices of cabs may rise hence the total cost can be pretty high.

On the other hand, purchasing a car comes with other disadvantages. These include heavy traffic when driving cars during peak hours. Most importantly, finding the right parking place can be tiresome with ever-increasing traffic. Alternatively, individuals can sit in a cab and go to their workplace or anywhere without experiencing much hassle.

The discussion about owning a car vs hiring a cab must focus on factors like a sense of freedom, ownership and the ability to benefit individuals during emergencies.

Car vs Cab: Which Gives More Freedom and Is Helpful in Emergency Situations?

Here, one can easily guess the answer. Purchasing a car gives a sense of ownership. More importantly, owning a car undoubtedly gives a sense of freedom as individuals can go out any time and go to multiple places as per their requirements.

However, in the case of app-based cab services, individuals have to update their requirements in case they choose to visit multiple places, and the process can be tiresome and may not always be successful.

For instance, when individuals have their own car, they can immediately use it to reach the hospital during a medical emergency. On the other hand, relying on cabs during medical emergencies can be risky.

Hopefully, the above debate on buying a car vs renting a cab, including the pros and cons of private and personal transportation, can help you make an informed decision.

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