Your numbers
Result
Road tax varies widely by state and fuel type; check your RTO’s rate for precision.
The car costs more than the car
Between the ex-showroom price and your driveway sits road tax, registration, insurance and handling — often 10–18% extra. Then the meter keeps running: fuel, maintenance, insurance renewals, and the silent giant, depreciation, which typically erases half a mass-market car’s value in five years. This engine totals all of it into two honest numbers: what the car costs per month, and what each kilometre truly costs.
The affordability yardstick
The verdict applies a conservative screen: EMI within ~15% of take-home pay and all-in monthly cost within ~25%. Inside both, the car sits comfortably in your budget; near the line is a stretch that crowds out saving; beyond it, the honest answer is a cheaper car, a bigger down payment, or waiting. A useful companion rule is 20/4/10 — 20% down, no more than a 4-year loan, total transport under 10–15% of income — stricter, but a good north star.
Cut the real cost, not just the EMI
Stretching the tenure lowers the EMI but raises total interest — the same trap as any loan (see our EMI guide). The levers that genuinely shrink cost: buy below your ceiling, put more down, pick a fuel-efficient model for your actual usage, and hold the car longer — depreciation per year falls sharply after year five.
Questions, answered
What makes up the on-road price?
Ex-showroom price plus state road tax and registration (roughly 4–20% depending on state and fuel type), first-year insurance, and charges like handling and accessories. The gap between ex-showroom and on-road is commonly 10–18% — always budget on the on-road figure.
What affordability rule does the verdict use?
A conservative pair of checks: the EMI should stay within about 15% of monthly take-home pay, and the total monthly cost of the car — EMI plus fuel and maintenance — within about 25%. Comfortably inside both is a green verdict; near the line is a stretch; beyond it, the car is over budget for that income.
How is the 5-year total cost of ownership calculated?
Down payment plus all EMIs, plus five years of fuel and maintenance, minus the resale value you expect at the end. Dividing by the kilometres you’ll drive gives cost per km — often an eye-opening number for lightly used cars.
How much does a car depreciate in India?
Steeply at first: roughly 15–20% in year one and around half its on-road value by year five for most mass-market cars, though brand and condition matter. The resale slider defaults to 45% of on-road at five years — tune it to your model’s reputation.