Congratulations! After years of saving money and financially struggling, you finally have enough cash to buy a car in a country where more than 90% of the population cannot afford to buy one with their own money. But the question is, is it even worth it to buy a car today? Especially when knowing that Pakistan is facing a severe inflation crisis. Ever wondered about renting a car instead of buying? Does renting a car seem like a good option or buying one is a better choice for personal use? Don’t worry, this article will clear all your thoughts and you’ll eventually decide on which path to choose.
Should you buy a Car?
Once upon a time, buying a car was extremely difficult and it was known to be a status symbol that only a few rich people could afford. As time passed, there came more revolutionary technologies and vast competition in the automobile industry and, as a result, the prices went down due to which the growing middle class bought them with disposable income on their hand. Let’s get into the details now to properly understand if you want to buy a car.
Criteria for buying a car
- Research
There are many car brands present in Pakistan. You need to research the automobile market before deciding to buy a car. The most famous car brands operating in Pakistan are Honda, Suzuki and Indus Motor Company (Toyota). However, Hyundai and MG are the new competitors that are quickly gaining popularity and giving the big three companies a run for their money.
Research the pros and cons of different cars then narrow down your list. Doing your research will also help you to evaluate the maintenance, fuel consumption, insurance, security and resale value of the car you want to buy.
- New or Used Car
Congratulations again, on narrowing down your list. Now comes the hard part. Do you want to buy a new car or the used one? This stage also requires research so that you can understand the differences between buying a new or used car.
If you go to the showroom to buy a new car, remember that the moment you buy the car, it depreciates whereas if you buy a used car, maybe two or three years old, it would save you around 40% of the cost of the same new car. But don’t go rushing on buying used cars, as used cars need to be inspected by an expert before buying. If you buy a used car, make sure you find out how many kilometers it has covered and whether any part of the car is damaged or replaced. Also, keep in mind the resale value. As some car brands have a much better resale value than others. So, make your decision wisely!
- Budget
This is probably the most important criterion for buying a car. If you can afford it, then sure buy your dream car, otherwise, focus on which car to buy which properly aligns with your budget. Don’t forget that a car needs periodic maintenance, insurance and fuel to run properly, which will eventually rise the cost of the vehicle.
Although, you can take a loan or buy the car in installments from the bank. People are prone to buy cars by either taking up loans or purchasing a car via installments due to inflation. So, the decision is yours to make depending on your budget.
- What’s the purpose?
This looks like a simple question but it is an important one. You have to ask yourself why you need a car and for what purpose. Do you travel daily to long distances? Do you want a car for your family? Do you want a car just to show off that you can afford one? State your purpose clearly. You should know why you need to buy a car or if you can rent out one instead of buying one. This needs to be answered clearly as cars do come up with many additional expenses.
- Availability of Spare parts and Resale value
If you decide on buying an imported car, remember that spare parts are extremely difficult and costly to find in Pakistan. On the other hand, locally produced cars have spare parts that are much easier to find and are cheap. Imported Japanese cars have spare parts that are very difficult to locate. Also, keep in mind the resale value of the car you want to purchase. You don’t want a car that quickly loses much of its resale value if you use it for 2-3 years. The car needs to have a strong market in the industry for it to have a good resale price.
Advantages & Disadvantages of buying a car
Now that we have looked at the criteria for buying a car. Let’s look at the advantages & disadvantages of buying a car.
Advantages
- Ownership
You become the owner of the vehicle when you buy it. You have the freedom to use the car in any way you like.
- Equity
As you make payments on a car loan, you build equity in the vehicle. Later If you decide on selling the car, you may be able to attain some money you invested.
- Potential Cost Savings
In the long run, buying a car is cost-saving for you if you drive a lot or need a car for work because you do not have to pay the rental fees associated with the rental car.
Disadvantages
- Upfront Cost
The upfront cost of buying a car is a huge burden on your financial status, especially for those who are on a tight budget. There are also fuel costs, insurance costs and maintenance costs that are also needed to be taken into consideration.
- Interest Rate
If you buy a car via a loan, remember you have to pay the loan back with interest, which will increase your expenses by a lot.
- Limited Warranty
Cars come up with limited warranties and if your car needs big maintenance, you have to cover it up yourself.
Should you rent a Car?
Let’s now know what renting a car means and how it competes with buying a car.
Renting a car means that you pay for the car only when you use it. You simply go to the rental car dealer and pay for the time you need that particular car for. It’s that simple! Renting a car can be a convenient and flexible option if you are traveling to a new city and want the freedom to explore. However, you should keep in mind that you are not the owner of the vehicle and you must keep it safe and secure.
Advantages & Disadvantages of Renting a car
Renting a car is not an easy option. You have to keep in mind how long you need a car. Let’s look at the pros and cons of renting a vehicle
Advantages
- Cost-Effective
Renting a car can save you huge financially. You only have to pay for the time you use that car, which is much cheaper than owning a car and paying for its maintenance. Low-income class people can afford to rent cars because of their cost-effectiveness.
- Variety of Vehicles
Car rental companies often give you a variety of cars to choose from. It is up to you to decide which car you want to take with you.
- Great for vacations
If you want to travel to a new city, or just want to visit the Northern areas of Pakistan, renting a car is a great option. It does not involve you paying huge amounts of money.
Disadvantages
- Terms & Conditions
The biggest disadvantage is that car dealers have strict terms & conditions which you have to sign. That means you are responsible for the safety of the car for the time you rent it.
- Fraud
There is a rising number of fraudulent activities in the rental industry. Rental dealers usually target their clients with claims that the client has stolen the vehicle and they will act against them.
- Surge in Rates
Rental car dealers can increase the price massively on occasions like public holidays, extreme weather conditions, wedding events. This can be a huge burden on low-income class people.
Which path should you take?
Buying a car can be a great investment if you plan to keep it for a long time, as it will appreciate in value and you can use it as long as you maintain it. However, renting a car can be a cost-effective option if you just need it for a short period of time, since you won’t have to worry about maintenance and you can return it whenever you’re done. Ultimately, the decision between buying and renting a car depends on your individual needs and budget.
