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Car Ownership Experiences

Car ownership experiences are directly associated to the car buying process. The experiences are purely based on whether the car buyer purchases a new car or used car. These car buying scenarios have different aftermaths and experiences.

New Car Experience

Buying a new car is definitely preferred by most of the car buyers. However, the cost of new cars has risen faster than the earning potential of Indian buyers. The recent increase in car prices, interest rates and fuel prices have actually taken away Indian buyers off the wind.

Though inflation has negatively affected the car industry and the buyers, it has also proved to be a boom for them. The high price tag of cars has forced banks and financers to increase the loan period. Earlier, car loan was available till a maximum of three years but now it has been extended to five years to maintain lower EMI (Easy Monthly Installments). Interest rates have also increased but there are people who are ready to pay the high interest price if the monthly payment is affordable.

Let's take an example to compare the difference in car loan taken for three years and five years. Assume that a buyer wants to purchase Maruti Suzuki Alto that is available at an ex-showroom price of Rs 2, 33,457. With the current interest rate of around 17%, the results are as follow:

Loan Period	Down Payment	Loan Amount	EMI	Extra Amount Paid at the End of Loan Period
Three Years	Rs 33,457	Rs 2,00,000	Rs 7131	Rs 256716
Five Years	Rs 33,457	Rs 2,00,000	Rs 4971	Rs 298260

The table above clearly dictates that for a loan period of three years, the buyer is paying an extra amount of Rs 23,259 as interest and for a period of five years, the buyer is paying an interest of 64,803. Obviously for a longer loan period, the buyer is paying more even though the monthly payment is lower as compared to the three year loan period. Eventually, by the time loan period will end, the value of the car will be reduced. The pain of paying a huge interest is a big pain and reduction in the re-sale value is even a bigger pain. Apart from the actual buying strategies, new car buyers always have to pay less on maintenance and service. All these also add to the acquisition cost of the car. Experiences with new car are smooth, joyful and enticing.

Used Car Ownership

Majority of the people doesn't prefer buying a used car but some do especially the ones who are new for cars. They feel that they should have a good old on the steering wheel before they make a fresh purchase. The increased new car prices have also increased the worth of used car market in India. Let's take the same example of Maruti Suzuki Alto. Assume that the cost of used Alto is nearly about Rs 1, 33,457. Make the same down payment as made for new car ownership.

Loan Period	Down Payment	Loan Amount	EMI	Extra Amount Paid at the End of Loan Period
Three Years	Rs 33,457	Rs 1,00,000	Rs 3565	Rs 128340
Five Years	Rs 33,457	Rs 1,00,000	Rs 2485	Rs 149100

AThe table above clearly dictates that for a loan period of three years, the used car buyer is paying an extra amount of Rs 128340 at the end. For five years, the buyer is paying an interest of about Rs 149100, more than the actual amount of the used car.

At the end of loan period, used car value will also reduce more than that of the new car. Paying an interest more than the actual car price is really terrific and mind-eating. In case of used car, the buyer also has to spend more on maintenance and service which adds to the actual cost of the ownership. All this adds to a bad experience with used car. So, now you decide which car you want-new or old?