Buying a new car is an exciting milestone, but the real cost of ownership goes far beyond the showroom price. From EMIs and fuel bills to insurance and maintenance, a car’s total cost can surprise first-time buyers. Here’s a realistic look at what you’ll spend to keep your car running every year.
1. On-Road Price and Loan Costs
The on-road price of a car includes ex-showroom cost, RTO registration, and insurance. For a mid-range car priced at Rs 10 lakh, the total on-road cost can touch Rs 11 lakh depending on the city.
If financed, a Rs 10 lakh loan at 9% interest for 5 years adds around Rs 2.4 lakh in interest. A higher down payment and shorter tenure can help reduce EMIs and total interest paid.
2. Fuel Cost Per Month
Fuel is one of the biggest ongoing expenses. A petrol car offering 15 km/l and covering 1,000 km monthly will consume about 67 litres, costing around Rs 7,000 a month or Rs 84,000 annually (assuming petrol at Rs 105/litre).
Diesel cars are more efficient at 18–20 km/l but are costlier to buy. EVs, on the other hand, can reduce running costs by up to 70%, depending on charging rates.
3. Annual Insurance and Road Tax
Car insurance is mandatory in India, particularly the third party car insurance. Comprehensive coverage costs Rs 10,000–Rs 25,000 a year depending on the vehicle’s age and IDV (Insured Declared Value). Road tax and registration fees add 2%–10% of the car’s price, varying by state.
Pro tip: Compare quotes from multiple insurers and renew on time to avoid penalties and maintain continuous coverage.
4. Maintenance, Servicing and Repairs
Routine maintenance—like oil changes, filter replacements, brake pads, and tyre care—typically costs Rs 12,000–Rs 25,000 annually.
Skipping regular servicing can lead to costly repairs later. Budget an extra Rs 5,000–Rs 10,000 yearly for unexpected issues like punctures, minor accidents, or battery replacements.
5. Depreciation and Hidden Costs
Cars lose around 15%–25% of their value in the first year, and up to 50% in five years. Add expenses like parking fees, tolls, car washes, and accessories—these can easily total Rs 10,000–Rs 20,000 annually.
6. Total Estimated Annual Ownership Cost
Here’s what owning a mid-size car could cost you per year:
– Fuel: Rs 84,000
– Maintenance: Rs 15,000
– Insurance: Rs 20,000
– Loan Interest: Rs 35,000
– Miscellaneous: Rs 10,000
Total: Rs 1.5–2 lakh per year (Rs 12,000–17,000/month)
7. Smart Tips to Save on Car Ownership
– Choose a car that suits your actual driving needs
– Maintain tyre pressure and service regularly
– Drive efficiently to boost mileage
– When you buy or renew car insurance, compare your choices to get the best deal.
– Compare fuel, insurance and service costs before buying
– Consider EVs or CNG options for long-term savings
Conclusion
Owning a car in India comes with convenience and freedom — but also recurring expenses. Planning your budget beyond the purchase price helps avoid financial surprises later. Whether you’re buying your first car or upgrading, understanding the full cost of ownership ensures your dream car remains a joy, not a burden.
