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backpacker

Vehicle Around 2M For Non Resident Sri Lankan

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Guys,

I'm a young engineer working in Dubai. Usually I come to Sri Lanka twice a year (2 weeks each) for vacation and whenever I come I have to get a rented vehicle for my travelling. On average it costs me around 120k per year for rented vehicles alone. Considering this money drain and my plan to work in Dubai for next 5-6 years, I'm thinking of buying a vehicle for myself. Following are my requirements, concerns.

1. Fuel efficiency is not important, 8-9 km/l is enough

2. Need to have good ground clearance as I will ride on it roads less traveled in the hill country. But I'm not a serious offroader

3. Should be easy to maintain, repair as I don't have much mechanical knowledge and don't want to be stranded in the middle of nowhere

4. Usual occupancy will be 2-3 people

5. Should be auto gear as I have never driven a manual ever since that last ride at RMV Werahara

6. I will probably sell it after 5 years, so resale value is a matter

Vehicles I'm interested in are, Suzuki Jimny (3rd gen.), Honda HRV, CRV, Pajero Junior, Pajero IO, Nissan Xtrail (1st gen.). So which one of these are better considering my concerns?

Appreciate your valuable comments

P.S. If you ask why I buy without continuing to rent

a.) For the next 5 years I will have to spend 120x5 = 6 lakhs on rented vehicles.

b.) However, if I managed to buy it around 2M there will be a opportunity cost of 160x5 = 8 lakhs (considering FD for 2M at 8% interest)

c.) Insurance cost will be 25x5 = 1.25 lakhs

d.) I allow 3 lakhs for maintenance and repair over the next 5 years

e.) I assume I won't make a profit or loss by selling it (in real terms) after 5 years.

So its a vs b,c, and d (6 lakhs against 12.25 lakhs). Odds are against my decision of buying one for myself.

But there is this feel good factor by owning a vehicle in SL which cannot be measured. This will be my 1st vehicle in SL.

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I too agree with Rumesh. Let's Forget everything except the fact that you'll be spending about 2 million.

As correctly pointed out by Rumesh, time value for money alone is a huge factor. Money in your hand today is more valuable than money in your hand after 5 years due to currency depreciation and a multitude of other factors. You're better off making some sort of an investment with the 2 million and use whatever the profit for renting out a vehicle when you're here in Sri Lanka. You don't have to worry about any of the headaches of owning a rarely used vehicle.

Don't advocate it but in the eternal words of Jeremy Clarkson, "the fastest car in the world is a rental car".

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I don't understand how you end up spending 120K for renting a vehicle in Sri lanka. What's the vacation period there? 1 month? 2 months? For about 40-50k a month, you can get a decent car on rent for a month (I have been in rental car business).

You must be renting SUV's which are useless most of the time, difficult to park and difficult to manipulate in traffic.

Anyway since Rumesh and Sierra were talking about NPV, I took the liberty of opening up an excel and doing a calculation for you.

Option 1: Renting a car - Rs. 120,000 a year for 5 years - NPV at 10% discount rate is Rs 454,890 (you end up spending Rs. 454,890 in today's money over a 5 year period)

Option 2: Buy a car for Rs. 2,000,000, transfer fees 7,000, insurance at 25,000 a year, repair at 25,000 a year, revenue license at 4,000 a year, smoke test at 1,000 a year, service at 15,000 a year (2 service per year) gives a total initial spend of 2,078,000 for first year + 70,000 for subsequent years and a residual value (resale after 5 yrs) is considered as 2,000,000 - gives an NPV of Rs. 961,861 (you end up losing Rs. 961,861 in today's money)

Option 3: Buy a car with third party insurance and run without a single accident for 5 years - all above costs minus the 25k a year for insurance - NPV of Rs. 889,819 (you end up losing Rs. 889,819 in today's money)

and i'm not even considering the opportunity cost of spending money upfront on a car.

I'll leave it to you to decide.

Edited by Crosswind
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@Crosswind, he says twice a year two weeks each. You are right. To spend 60k each time on rental he must be renting a SUV.

@backpacker - If you rent a vehicle regularly try to build a rapport with a reputed car rental. Once you become a genuine regular customer you are more likely to get a good car at a preferential rate. My friend who make regular visits from Canada just drop an email and reserve the SUV of his choice before coming here. He has been doing this for more than 15 years now with the same car rental.

Edited by Rumesh88

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I wont repeat all of the above benefits of mentioned above... and I'm not judging but spending 120k a year is not that big a deal on a middle eastern salary.


So long for your "cost/benefit". Do you realize that you cant expect to run on the same set of tires for 5 years? the rubber is gonna either perish and/or wear out..

And if I lived away from home and had only 2 weeks with my family i wouldnt waste a whole day re inflating tyres, recharging the battery, washing servicing the car and what not. And another day getting the A/C regassed/serviced. (and these aren't free either)

And whats the $$$$ value of simply getting into a freshly cleaned trouble-free car and touring the country as opposed to opening your garage to the depressing a sight of a dusty, dirty, moldy (possibly rat infested) car :)

Edited by Watchman
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Thanks for informative replies Gents,

Usually I take vacation in April and December (2 weeks each) and last time rented a 2014 vezel from a place in pita kotte for 60k. I had to stay 1 week longer and paid the rent for the additional week on daily rate basis which amounted to 31k. So rent for 3 weeks was 91k and at that point I thought it's always better to have my own car (let me know if you are aware of a rental car company which offers better rates). But it will have to be parked for the rest of the year.

I too agree with your opinion of not buying it considering

a.) the NPV of 3 options mentioned by crosswind

b.) maintaining a 10-15 year old car without having much know-how

c.) compelled to use an old vehicle throughout next 5 years

Watchman: yeah 120k per year is not much for a middle eastern salary, true that.

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Rent a car from an individual instead of a company for a better rate. Any individual who does it professionally (has a small fleet, signs a legal contract, has rent-a-car insurance for his vehicles) should be fine. car rental companies (barring a few) get vehicles from individuals, keep a 20-30% mark up and rent them out to other individuals.

SUVs are totally overrated so think twice. Price difference when buying a Priass and Vezel is not much but vezels get rented for about 30k more than a priass. Vezel is less spacious, smaller, slower and is also 2WD but goes for a higher rent. Go for a sedan. There are newer (2011/12 and above) Hyundais and Kias that can be rented for like 50-60K compared to a similar year Allion or Premio which can cost about 80+.

If you need to save some cash on fuel and wish to go for a hybrid. Honda Fit and Insight go for much lower rates. Vezel and fit are virtually the same thing.

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I helped a friend to rent a car from Malk#y Rent - a - car a few weeks ago. He said for the whole week the charge was 28k (without the driver ) The car was a Corolla 121.

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Thanks for informative replies Gents,

Usually I take vacation in April and December (2 weeks each) and last time rented a 2014 vezel from a place in pita kotte for 60k.

Wrong choice of vehicle for your purpose as others have pointed out. You could have either gone for a sedan or a vehicle like Kia Sportage. After all fuel efficiency need not be a priority in your case.

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@crosswind

yeah, should search for a individual who rents car. who knows, might get a discount in the long run

@sathyajith99

4000 per day for a 121 is too much in my opinion. that place in pita kotte gives you the same for 3000

@rumesh88

can't drive a sedan through these roads without scraping the bottom. the rent for sportage is 4000 and vezel is 4500, that's why I opted for a vezel

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Where I actually intended to post this (but accidentally posted it on some brakes related thread)

I have the same problem with my Japan visits. Eventually I too brought a car over there because
1. renting a car in Japan for 1 month costs 240,000yen (without insurance, gasoline, etc...) and you can buy the same car for 1,000,000yen :)
2. well..it was the only way I could have some of the fun to drive cars as they are unavailable or unaffordable in SL :D

However, in a SL context considering the cost of cars and the rental costs; I too agree with the others...go on renting ! Also, for your budget you are looking at a significantly old car which even if you are lucky enough to find a good speciment (which is highly unlikely); even then you would have to spend on pre-emptive maintenance etc for it to continue to be in good condition. So yeah...go n renting...
Look on the bright side..if you rent..you can have different types of cars depending on your feeling :D.

If you do decide to buy a car...maybe you should buy it with the intention of your family using it...or atleast you renting it out to others so that you can justify the investment. The justification you have done is really not sufficient justification. So if you let the family use it then you can factor in that cost (which might show you that you can spend a bit more than mil on the car) or the income from renting it out.

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Hello Backpacker

I have done something same, I was looking for Jimny and ended up buying a Hilux smart cab, 3 of us in my family living 3 different country and one of us in SL for a month period every year, so that is saving us big money for a rent a car.

We have the requirement of 4WD because of a agricultural land + some fertilizer and equipment delivery to the land so the Toyota Smart cab was the ultimate answer. as it cheap to buy, Toyota reliability, 4 people will fit in, go anywhere capability and tick all the boxes.

In your case it may be not worth of holding 2mil for a car which depreciate the value, so rather buying a one i think you better get a one as a all rounder for your home or just use what ever you want to use as a rental.

regards

JC

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Hello Backpacker

I have done something same, I was looking for Jimny and ended up buying a Hilux smart cab, 3 of us in my family living 3 different country and one of us in SL for a month period every year, so that is saving us big money for a rent a car.

We have the requirement of 4WD because of a agricultural land + some fertilizer and equipment delivery to the land so the Toyota Smart cab was the ultimate answer. as it cheap to buy, Toyota reliability, 4 people will fit in, go anywhere capability and tick all the boxes.

In your case it may be not worth of holding 2mil for a car which depreciate the value, so rather buying a one i think you better get a one as a all rounder for your home or just use what ever you want to use as a rental.

regards

JC

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JC,

You're hilux actually had a commercial benefit and you use it for stuff you cant quite use a "rental" for. Plus its used for 3 months which isnt too bad.

Franky, its all anout the $$$$. If you have enough money you can buy even a range rover and keep it locked up. Frankly, as an expat visiting Sri Lanka for limited periods of time OP is better off saving time and effort by renting.

I think this dead horse has been beaten enough.. Hopefully the OP got the message.

:)

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Hello Backpacker

I have done something same, I was looking for Jimny and ended up buying a Hilux smart cab, 3 of us in my family living 3 different country and one of us in SL for a month period every year, so that is saving us big money for a rent a car.

We have the requirement of 4WD because of a agricultural land + some fertilizer and equipment delivery to the land so the Toyota Smart cab was the ultimate answer. as it cheap to buy, Toyota reliability, 4 people will fit in, go anywhere capability and tick all the boxes.

In your case it may be not worth of holding 2mil for a car which depreciate the value, so rather buying a one i think you better get a one as a all rounder for your home or just use what ever you want to use as a rental.

regards

JC

Hi JC

Jimny seems a very desirable vehicle for a single guy like me who is going to be in SL for only a month to travel around. But as you said using a 15-20 year old vehicle once you come to SL for vacation is not really pleasing. Renting is the better option but rent of decent vehicle with good ground clearance is going over the roof nowadays. Rav4, Sorento, Montero Sport will set you back 1 lakh per 2 weeks easily if you get it from a rental company than a individual.

But renting is the sensible option as although I buy, no one is going to use it for rest of the year.

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Hi JC

Jimny seems a very desirable vehicle for a single guy like me who is going to be in SL for only a month to travel around. But as you said using a 15-20 year old vehicle once you come to SL for vacation is not really pleasing. Renting is the better option but rent of decent vehicle with good ground clearance is going over the roof nowadays. Rav4, Sorento, Montero Sport will set you back 1 lakh per 2 weeks easily if you get it from a rental company than a individual.

But renting is the sensible option as although I buy, no one is going to use it for rest of the year.

So i think you got your answer

regards

JC

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Where I actually intended to post this (but accidentally posted it on some brakes related thread)

I have the same problem with my Japan visits. Eventually I too brought a car over there because

1. renting a car in Japan for 1 month costs 240,000yen (without insurance, gasoline, etc...) and you can buy the same car for 1,000,000yen :)

2. well..it was the only way I could have some of the fun to drive cars as they are unavailable or unaffordable in SL :D

However, in a SL context considering the cost of cars and the rental costs; I too agree with the others...go on renting ! Also, for your budget you are looking at a significantly old car which even if you are lucky enough to find a good speciment (which is highly unlikely); even then you would have to spend on pre-emptive maintenance etc for it to continue to be in good condition. So yeah...go n renting...

Look on the bright side..if you rent..you can have different types of cars depending on your feeling :D.

If you do decide to buy a car...maybe you should buy it with the intention of your family using it...or atleast you renting it out to others so that you can justify the investment. The justification you have done is really not sufficient justification. So if you let the family use it then you can factor in that cost (which might show you that you can spend a bit more than mil on the car) or the income from renting it out.

As far as I know cost of a parking lot in urban areas of Japan is quite high. So where do you park when you are out of Japan?

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As far as I know cost of a parking lot in urban areas of Japan is quite high. So where do you park when you are out of Japan?

At home :) So no need for a parking permit.

If you live in an actual house one just need to show the authorities that one has the space to park within the individual's property/land.

Previously, we used to live in an apartment complex in the city...at that time the apartment complex had parking for its tenants and it cost only 10,000yen + tax per month. Which is still cheap than on the street or in a third-party parking garage.

Edited by iRage

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