When you are buying a new car, you need to look beyond its price tag, maintenance costs, fuel efficiency, insurance, and others. Still, these factors may be difficult for keeping track and analyzing the TOC or Total Cost of Ownership of a car when you buy a car.
After finalizing the desired car, you have to calculate the actual ownership cost of the car. The cost of ownership is not actually the cost of acquiring the car. Right from the first day and in the long-run several types of recurring or one-time expenses are incurred which you have to take into account. For instance when you buy a car worth Rs. 10 lakhs, it is not the only expense, you make. In the next 5-10 years, there are many other expenses that will be added to this list like annual maintenance cost, insurance, taxes, etc.
Get An Idea of TCO Before Buying a Car
It may not be always possible to calculate the total ownership cost of a car because most expenses are not already fixed. There are many expenses that you incur all of a sudden. But in this situation also, for the same category of issues, different cars need different levels of expenses. Though it is not essential to have the correct figure, estimating the actual ownership cost is sufficient to determine the real ownership cost.
You should ask for total ownership of the car when you buy a new car because it includes many factors including the following:
- Purchase Cost
The buying cost is an on-road price, which buyers pay to purchase a car. The upfront cost or purchase cost is the on-road price fixed by a car dealer after considering the discounts. This cost may be thought of as the only cost to own a car, but it is one of the components of car ownership cost.
- Price of Accessories
After you purchase a car, you may buy additional components for improving the functionality and look of the car. The additions include the up-gradation of an existing music system, decoration of the rear and the interiors, and customizing with alloy-wheels and body kits. They are a part of the total cost of car ownership.
- Depreciation Cost
Car is an asset and its value depreciates over time. The moment you buy a car, its value depreciates. With each passing year, the value of a car depreciates around 30%-40% each year.
- Fuel Cost
One of the important expenses that car owners have to expend is the cost of fuel. whether you own a diesel car or a petrol car, fuel cost should be a part of your budget right from the start.
- Insurance Cost
Car insurance is compulsory and every car owner needs to secure his car from theft, accidental repairs, and other damages. The car insurance rates range between 3%-4% of the car booking price. The more is the car insurance cost, the higher is the premium, which car owners should pay.
- Car Financing Cost
The car loan facility has fulfilled the dream to own a car. However, car loans mean monthly EMIs that you have to pay timely. The EMIs of car loans include the original loan amount as well as the interest.
- Miscellaneous Cost
The miscellaneous costs include car parking fees, toll charges, and other charges. If you sum up these expenses on yearly basis, the amount could be astounding.
Calculate the Real Ownership Cost
First of all, fix a budget and search for cars that come in that price range. The price of your car should not be more than 60 percent of the gross annual income. The purchase price is not the only factor that you should consider while buying a car. You can calculate TCO online that can give you a rough estimate.
The total cost of ownership car calculator includes the EMI amount, road and registration taxes, monthly fuel cost, maintenance costs, and insurance premium. When you take a loan, it is a better option to make a down payment. The price you pay to purchase a car is not the only price. In the next five years, you have to spend an amount on other charges too.