When we plan for a car, most of the time, we think of only the purchase price of the car. Once we meet the dealer we become aware of the on-road cost, that includes, insurance, RTO expenses, Road tax and certain hidden charges from the dealer. The real cost of owning the car is beyond on-road cost also.

Whether you are making a down payment or taking loan, you should understand the factors that determine the total cost of owning the car, post purchase and accordingly figure out how much can can afford. Let’s take a look at the factors –

  • Car loan EMI or the interest on the money paid to buy the car.
  • Insurance – Cannot and should not avoid.
  • Fuel – Big elephant in the room! Discount the mileage claimed by the companies by 50%. That is the number of KM your car will run for 1 litre of fuel in the city.
  • Servicing – The first year servicing may be free, but following years it would start costing you. The price may vary from 2000 – 5000 every servicing.
  • Maintenance – Tyres, Wheel alignment, AC gas…Usually you won’t need much for the first 2 years. Post 2 years these expenses start showing up.
  • Accessories – you may need seat covers, teflon coating, steering cover, nice pillows etc.
  • Parking – Malls, Movie theaters etc. all have paid parking these days. Be prepared to shell out 200-300 rs a month on parking along.
  • Car cleaning – Getting a person clean your car daily would cost around 300-400/month, depending on which locality you live in.
  • Toll and other tickets – You may feel that after paying the life time road tax, you should be driving for free. But soon you will realize that most of the good roads have toll taxes. Would not hurt you much if you don’t travel outside city too much.
  • Depreciation – New cars can lose over 20 percent of their value in the first year. The residual value of the car depends on the age, KM driven and overall condition. Certain brands have higher resale value while certain ones don’t have enough demand for used cards.

The idea is not to scare you from buying and owning a car. Car gives safety, security and comfort to the family, that a cab or auto cannot give always. Car has other emotional benefits also that cannot be quantified. Of course, the choice of the car should be properly thought through to avoid any financial stress later.

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Check what is the monthly expense of the car you own or want to –