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Total Cost of Ownership (TCO) is a data science-based tool which calculates the total money that you will have to spend owning a car, bike or a scooter for a period of five years. This tool also helps in comparing the ownership of cost of vehicles and let you know which will be the cheapest for you to own. You can also view the breakdown of the cost among different parameters such Insurance Cost, Fuel Cost, Tyre Change Cost, Service Cost, Depreciation.
Total cost of ownership is based on the Ex-showroom price and monthly running kilometers of a vehicle. All the costs such as insurance cost, fuel cost and so on are calculated using Droom's propriety algorithm
Steps in Calculation:
The tool gives the ownership cost of any car, bike, scooter in two forms:
Insurance Cost: It is mandatory for every vehicle running on Indian roads to have an insurance coverage both for the vehicle and third party. This Insurance requires a premium to be paid every year. The sum of premiums of the vehicle for a period of five years gives the insurance cost.
Fuel Cost: Every vehicle returns different mileage. Depending upon the monthly running kilometers, mileage and fuel type, the fuel cost will vary.
Tyre Change Cost: This includes the cost involved in replacing the existing tyres with new ones during 5 years
Service Cost: Every automobile will require a regular maintenance and the expense for this maintenance varies depending upon the brand, kilometers run and age of the vehicle. This service/ maintenance cost has been calculated for a period of 5 years.
Depreciation: The value of every vehicle goes down from the time of manufacturing throughout the useful life. This decrease in value year on year throughout the useful life of the vehicle is called depreciation.