Sean is a graduate of Temasek Polytechnic. He has been taking Grab to work and also to night classes at Singapore Institute of Management (SIM) and he is very busy. It has been said that cars in Singapore are the most expensive in the world. Due to his grit and thriftiness, he has amassed quite a sum.
He is wondering whether he should buy a car, not to be a chick magnet, but whether it is economical to do so. Besides, he could pay for a car in one lump sum.
Using Google Map, he calculates that he travels about 10,000 km a year. He has eyes on a car which cost $78,000 inclusive of COE. Ouch! That hurts. Bad. Sean wanted to give up the comparison as it seems the upfront cost of a car is the deal breaker. However, having learnt krav maga, he persisted with a relentless fire in his eyes.
Hmm..there is some hope that a car could be cheaper... he thought to himself.Sean found that it has a petrol consumption of 10.40 km/ litre through the web. Petrol prices has risen up 4 times in 4 weeks and is now $2.69/litre. This means it will cost him $0.26 per km he drives.
Sean used Grab app to list down the places he usually goes to so as to find the average $/km he has been paying to Grab and realizes it is significantly higher than if he were to drive a car by himself.
Grab cost $1.42 per km while driving cost $0.26 per km. Driving a car cost $1.16 per km cheaper than Grab.
|Grab APP trips|
Hmm..there is some hope that a car could be cheaper... he thought to himself.
From the web, he managed to find the yearly road tax, yearly car insurance and estimated yearly servicing cost of the car. He concentrated on the places he went and their car park charges and estimated he would spend about $2400 on car park charges in a year. ERP charges are not included as Grab would charge ERP too.
Could the lower running cost of driving a car yearly compensate for the high upfront cost of the car, he thought to himself?
As Sean is a very risk averse investor, he estimated a 2%pa rate of return for funds under his management and tried to forecast how much he would have if he had Grabbed for 10 years compared to driving a car for 10 years.
Sean learnt that he would be getting back a small part of the upfront cost as PARF at the end of the 10th year and this is included in the calculations.
After 10 years, if he had Grabbed , he would have saved $1,966 if he just Grabbed!