The diesel prices went up by over Rs. 5 yesterday. LPG prices were hiked a few months back. And petrol prices keep moving up and down. It is tough to make decision about which car/fuel type would work best for you.
Here are 4 easy steps to help you figure out things:
- Calculate cost per km for the fuel type: So all you need to do is divide the price/litre of the fuel by expected mileage. Let’s say, a petrol car delivers 15 kmpl. The price of petrol (in Delhi) is Rs. 68.46/litre. So you’ll end up with cost per km of Rs. 4.56/km. If the diesel variant of the car delivers 17 kmpl, then you cost of diesel will be Rs. 2.76/km (Rs.46.95/17=2.76).
- Compute the per km savings in cost: That’s easy—just subtract the one (Rs.2.76/diesel) from the other (Rs.4.56/peetrol) and what you get (Rs. 1.8) in per km savings. This number is extremely helpful in solving the “which fuel” puzzle.
- Estimate savings from the cheaper fuel: Just multiply savings/km (Rs. 1.8) by your expected monthly usage (say 500 km). That means you will save Rs. 900 per month.
- Arrive at a cost-benefit ratio: There are two scenarios here:
- Let’s say you are buying the car on EMI…then you have simple question to answer. Does the savings offset the higher EMI for the more expensive diesel? Considering the price of diesel variants is higher by Rs. 1 lakh, the EMI is likely to be about Rs. 2,250 higher. So for a 500 km/month run, the savings (Rs. 900) clearly are not good enough for a switch to diesel.
- Let’s say you are buying the car cash down: In this case, you need figure out the payback period—time taken to recover the additional amount. This too is simple—just divide additional amount you are paying for diesel (say, Rs.1 lakh) by savings per month (Rs. 900)…and you know it will take 111 months (or over 9 years!) to recover the additional investment in the diesel car. Do you want to want wait that long? You are the best judge of that!
You can apply the same method to compare cost/benefits between any two or more fuel types.
Did you find this helpful? How do we make this better? And yeah..time for Cartoq.com to have a”Multi Fuel Decide” app instead of just the Diesel Decider…start petitioning!