## Tuesday, August 28, 2007

### cars!!!

Well how do we go about buying a car?? How do we know if it is needed for us? How do we know the monthly bills when we get a car? Here are a few calculations….

1. Choose the car you wish for. Be it anything.
2. Get to know its mileage from websites or auto magazines.
3. Get to know its Cost from websites or auto magazines.
4. What is the amount you are going to pay as the down payment? (The amount that you would pay to drive home a car)
5. Are you going in for a loan? If yes then how much EMI you can manage? (EMI is easy monthly installments)
6. How many kilometers would you drive per month? (1000-2000 kms is the max a individual in a city can drive. If you find it to be more than 3000 then you are a taxi cab driver. Am I right??)
7. What is the budget you are planning to allocate for the car?

When you have found the data for the above questions then follow on. Let’s assume car in my mind costs 6L and the mileage is 18 kms and the type of vehicle is Diesel.

Say I make a down payment of 2L for the car and the rest is a ICICI car loan for 4L.
So now I have completed the steps 1,2,3 and 4.

To calculate the EMI, we have the loan amount i.e. 4L. The current ICICI rate per lakh is some where near Rs. 1710. So for the 4L loan amount it is 4 x 1710 = 6840. This is the EMI. With this we add an insurance amount of Rs. 1000 and a maintenance coat of Rs. 1000. So the fixed cost actually is Rs. 8840. This is the fixed coat / month. By fixed I mean even if you keep the car locked in the garage for the entire month you are entitled to pay this amount.

Now, had you compared a petrol variant and a diesel variant you might be confused which one to go for? The following calculation will answer that question with ease.

Fuel cost per month = (Cost per liter / Mileage) * Number of kilometers you plan to drive. Optimistically 1500 kms per month.

So the diesel variant comes to : (35 / 18) * 1750 = 3402

GRAND TOTAL = 10242