Personal Finance

Get more bang for your fuel bucks

Anand Kalyanaraman | Updated on July 02, 2011 Published on July 02, 2011

Don't let the hike in fuel prices bring you down. Here are some ways to work around it.



Those of you with vehicles would have had your wallet came under renewed attack last weekend. With diesel joining the long list of items whose prices have been marked up, your cost of commute has gone up - yet again. The price of petrol too has been hiked several times over the last year. Given that travel costs account for a good slice of the family budget, are there ways to optimise on fuel expenses and save that extra rupee? Sure, there are.



The right car



Big ticket decisions such as the choice of car have long-term implications on your fuel bill. With umpteen options catering to a variety of budgets, needs and aspirations, car buyers in India are today spoilt for choice. Don't rush in and base your decision on the cost of the car alone. Also, take into account the cost of the fuel the car runs on, and the fuel efficiency (mileage) of the car. A costlier car which runs on cheaper fuel and provides higher mileage (diesel cars) could in the long run prove to be a more economical option than a cheaper car which runs on a costlier fuel and provides lower mileage (petrol cars). However, this need not always be the case and depends on the usage of the car. If the usage is heavy, a diesel car would offer a better deal than a petrol one. However, if the usage is not high, then you may be better off with a petrol car. A breakeven analysis comparing the extent of usage at which the diesel car becomes the preferred option, should be done before arriving at the buying decision. At the point where the benefits of lower running costs exceed the cost of the initial higher purchase price, diesel cars become the preferred option.

Assume that a diesel variant of a car costs Rs 75,000 more than its petrol variant. Considering mileage of 16 kms a litre for diesel and 12 kms a litre for petrol, and cost of diesel and petrol per litre at Rs 41.12 and Rs 63.37 respectively (rates in Delhi), it would take around 27,670 kms for the diesel variant user to break even. At around 1,050 kms a month, the diesel variant user would break-even in around 26 months, and at 1,500 kms a month, he would break-even in around 18 months. The higher the monthly usage, the lower the break-even period.

Industry statistics show that customers have been showing a marked preference for diesel cars, despite their initial cost being considerably higher than their petrol variants. This is not surprising, given that the difference between the cost of diesel (even after the recent hike of Rs 3 a litre) and that of petrol is as high as Rs 22.25 a litre (in Delhi). Also, with improvements in technology, many operational inefficiencies earlier associated with diesel cars have been rectified.

Save on payments

If you are paying for your fuel purchase with credit cards, use cards which refund the surcharge (generally 2.5 per cent) usually charged on card-based payments. This facility is available on cards issued by many banks, and also on co-branded cards issued by fuel companies in collaboration with banks. For instance, Citibank has tied up with Indian Oil while ICICI Bank has tied up with HPCL to offer co-branded cards.

Also, fuel purchases using co-branded cards may entitle you to handsome reward points, which could be redeemed against fresh fuel buys.

Drive smart

Finally, do not underestimate the beneficial effects of efficient driving habits on your pocket. Simple but effective money savers include keeping the car clutter-free, both accelerating and slowing down gradually, driving in the right gear, driving within speed limits, keeping tyres properly inflated, using air-conditioning only when required, using good quality fuel, and keeping the vehicle well-maintained. Besides, car-pool as far as possible. It is not only friendly on your pocket, but also helps you do your bit towards the environment.

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