The True Cost of Car Ownership That First-Time Buyers Often Forget

Buying a car is one of the biggest personal milestones for many Indians; it symbolises freedom, comfort, and convenience. But what if we told you there’s more to it than just the showroom price?

The truth is, car ownership is a complex financial journey that extends far beyond the showroom price. From dealership fees to recurring maintenance bills, car ownership today has become more layered than ever.

Costs That a First-Time Buyer Might Overlook While Buying a Car

When it comes to owning a car in India, the ex-showroom price is just the beginning. Many first-time and even experienced buyers overlook the long-term financial commitments that come with vehicle ownership.

Here’s a breakdown of the costs that are often overlooked, that add up over the years:

1.   Taxes and RTO Fees

Every new car sold in India is subject to mandatory charges such as Road Tax, Registration Fees, and various State Levies. These charges are not standardised nationwide and can vary significantly from one state or union territory to another, depending on local regulations, vehicle type, and engine capacity.

• RTO charges can range between 8%–18% of the ex-showroom price.
• Some states, like Karnataka or Maharashtra, charge significantly more for larger engines or luxury cars.
• Add to this the Green Cess or Pollution Tax in states like Delhi NCR.

2.   Interest on EMIs

Most car buyers in India opt for a loan to finance their purchase. While EMIs make buying easier, the interest paid over time can add up significantly, making it even more important to protect your investment with the right car insurance.

• For a ₹10 lakh car, a 9% interest loan over 5 years can mean paying an additional ₹2.4–₹3 lakh just in interest.
• Pre-closures or part-payments might have penalties.

3.   Insurance Premiums and Add-on Covers

Every vehicle must have at least third-party insurance by law. For better coverage, most owners opt for comprehensive plans with add-on riders. Here are five optional covers that offer extra protection with minimal premium hikes:

●     Zero Depreciation Cover

Get full claim payouts without factoring in depreciation. It is ideal for cars less than 5 years old or high-end models.

●     Engine Protection Cover

Covers engine damage from waterlogging or oil leaks. This add-on is particularly crucial for car owners in flood-prone cities like Mumbai, Chennai, or Guwahati, where waterlogging during the monsoon season can severely impact engine components.

●     Return to Invoice Cover

Ensures reimbursement of the car’s original invoice value in case of theft or total loss, great for new or financed vehicles. It is highly recommended for new or financed vehicles.

●     Roadside Assistance (RSA)

Offers help for flat tyres, jumpstarts, towing, and more, handy for solo or long-distance drivers.

●     Pay As You Drive (PAYD)

In pay as you drive car insurance, you pay premiums based on the kilometres you actually drive. It is smart and cost-effective for low-mileage users.

4.   Maintenance Costs

Even a brand-new car will need servicing every 6-12 months. Then come the unplanned costs like brake pad replacement, tyre changes, or AC gas refill.

• Average service cost per year: ₹8,000 – ₹25,000 (varies by segment and brand)
• Battery replacements (₹5,000-₹15,000)
• Tyre changes every 3-4 years (₹16,000-₹40,000)

5.   Commuting and Parking Charges

Daily commuting costs are not just about fuel. You’ll spend on:

• Tolls (via FASTag)
• Parking fees at malls, offices, or residential societies
• App-based subscriptions for music, navigation, or safety services

In urban areas, monthly parking expenses can go up to ₹2,000 – ₹4,000. And rising fuel prices only add to the pinch.

6.   Depreciation

• The minute you drive a car out of the dealership, it starts losing value.
• A new car typically depreciates 15–20% in the first year, and around 50% by year 5.
• Resale value is impacted by model popularity, colour, service history, and accident records.

7.   Accessories and Customisations

From seat covers and alloy wheels to tech upgrades like dashcams, Android Auto, or ambient lighting, personalising your car adds flair but also dents your wallet.

• Essential accessories: ₹15,000 – ₹50,000
• Cosmetic upgrades: Can go up to ₹1 lakh+

Owning a car in India is no longer just about affording EMIs or refuelling it once a week. From taxes and insurance premiums to maintenance surprises, parking headaches, and value depreciation, the real cost of ownership runs far deeper than most first-time buyers realise.

Whether you’re eyeing your first hatchback or upgrading to a premium SUV, think beyond the price tag. Because true car ownership isn’t just about driving, it’s about driving informed.