Buying Or Renting A Car: What Appeals More To Financially Savy Indiviuals In 2025?

Mulling over buying a car versus renting one? With factors to consider like hike in fuel price, ever-changing cab rates and the maintance cost of owning a car, let's figure out which option is more apt in 2025.

When Does Buying A Car Make Sense?

If annually your travel is close to 15,000 kms, purchasing a car becomes economically wise. The fixed costs boil down to EMIs, maintanance, and insurance start with spreading out basis your total distance.

Owning a car also makes more sense for people who:

• Travel to difficult locations during a day. 
• Live in remote areas with unreliable/consistently expensive cab service.
• You're a working woman who prioritises safety and privacy over cost.
• Your job or lifestyle requires travel to multiple locations, not a fixed route.
• Plan to use the car for at least 5–10 years.

If your usage is high and you plan to retain the car for several years, your effective cost per kilometre stabilises around Rs 16 to 17. This is generally lower than most ride-hailing costs in urban India. Hence, buying a car makes sense for you.

Understanding effective cost per kilometre is quite interesting because it negatively correlates with your travel. So, the more you travel, the less your cost per kilometre. That's because while fuel is variable, loan interest, maintenance, and insurance are fixed.

Tax Levied On Used And New Cars

Taxes are a less obvious but still significant part of the cost equation. In India, new petrol cars with engines under 1.2L attract a GST + cess of 29 per cent. On the other hand, a used car when bought by a registered dealer is taxed at 18 per cent, applicable on all vehicles withought any change basis the sixe of engine.

However, a used car, when bought from a registered dealer, is taxed uniformly at cab rates , regardless of the engine size.

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When Is Hiring A Cab Preffered? 

For people travelling short distances, especially under 9,000 km a year,

If your commute ends up being under 9,000 km a year then cab services if what one should lean towards, especially if your job requires you to change cities every alternate year.  

The average per-kilometre cost, including surge in pricing, ranges usually from Rs 20 to Rs 22.

What's Your Takeaway?

Ride-hailing applications prove the ideal choice if one tends to drive less than 40-45 kms over a period of five years. If your kilometre range extends beyond this, owning a vehicle is preffered.