The real cost of buying a car - Kotak Bank
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28 AUGUST, 2017

Owning a four wheeler is something you always look forward to. The excitement is immense and you just cannot wait to get your hands on the wheels of your vroom vroom machine! But before you buy your gateway to freedom and fun, do take time out to study the actual cost involved. Yes of course, like any other product, there are hidden and eventual costs that you may have to bear. But if you have a fair idea of what these costs would be, it would give you a handle over your finances.

So read to find out what does it cost to own a car:

Cost to bear while purchasing

The price you see in car adverts and commercials are always tagged as "ex-showroom price" — always remember this is NOT the true selling price of the vehicle. You'll always end up spending more, but "how much more" will depend on factors like the area where your vehicle is registered, the type of insurance chosen, the accessories you opt for, etc.

For instance, a car with an ex-showroom price of Rs. 14 lakhs with accessories, could actually cost you up to Rs. 17 lakhs or more.

Loan Calculations

In a market where all loan products look similar, providers offering services that cater to your needs and convenience might tickle your fancy. But make sure to get your facts and figures right before signing on the dotted line. Here's a handy EMI calculator to give you an estimate of your monthly payout as Car Loan EMIs. Also, explore convenient Car Loan options that can be tailored to suit your needs and would end up being lighter on your wallet.

Trim Level costing

Trim level refers to the level of luxury specs provided in a car, with the lowest being sparsely equipped and higher ones accompanied with greater amenities and more accessories. For instance, with the higher trim levels, you can expect features like a premium music system, rear camera, parking sensors, electric windows etc.

You are likely to find at least two or more trim levels for any car model, and the difference in their costing is always a substantial one. The higher variants although said to hold their values better, can set you back by a couple of lakhs.

RTO Registrations costs

Registration cost varies from one vehicle to another, and is influenced by various factors:

  • Size of the engine (the bigger the engine, the larger the amount)
  • Fuel type (subsidies are offered on electric and other non-conventional fuel types)
  • RTO Location - For Octroi zones, the charges are higher as against those beyond Octroi limits
  • Choice of registration number - A number in the default order shall cost you a nominal amount, whereas a special number of your choice or any number falling under the VIP category of RTO regulations shall cost you extra.
  • The overall ex-showroom cost (based on which the tax-added on-road price is determined)

Insurance Costs

Insurance premium of your vehicle is directly proportional to the pricing of the car. For instance, a car with a selling price of Rs. 7 lakhs may only have an asking of 7 to 9 thousand rupees a year, whereas a car costing Rs. 40 lakhs could have an asking premium of 50 to 70 thousand rupees per annum. In case a zero depreciation feature is opted for, the insurance premium tends to amplify.

After Purchase Costs (also known as Recurring Costs)

1. Fuel Costs

One of the deciding factors while selecting a car type is its fuel efficiency. If the vehicle is for regular use, a low fuel efficient car can end up burning a hole in your pocket. Diesel Cars tend to keep your pocket more happy with respect to fuel costs. Another way to cut costs is to use your Debit or Credit cards that offer surcharge waivers, cash backs or reward points. Check out such Cards that can help save money on fuel.

2. Servicing Costs

The second most important aspect to consider is the recurring cost you'll need to bear while servicing your car periodically. Cars that are manufactured and assembled in India cost lesser to service , while the ones that are imported as parts and subsequently assembled in India, shall cost much more as the procurement of each car part shall levy excess duties and logistic castings.

The build quality of the car also determines the frequency of servicing required, thus directly affecting your recurring costs.

3. Insurance Renewal Costs

Insurance policy is almost always offered and sold by the dealer during the purchase of the vehicle. After the insurance tenure expires, which is usually a year later, it is not necessary for you to continue with the same insurance provider. You may look up insurance quotes by various providers, compare them and see what best suits your need of coverage or premium budget.

Now that you have gone through the cost heads and have an idea about the costs involved in buying your mean machine, you can also check out other articles related to buying a car.

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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.