Buying a car involves more than choosing a model and checking whether the monthly EMI fits the budget. Loan interest, insurance and maintenance also add to the cost of ownership, making it important for first-time buyers to assess their overall expenses before making a festive-season purchase.
According to Kotak Mahindra Prime Ltd. (Kotak Prime), many first-time buyers today are considering cars priced at ₹5 lakh to ₹8 lakh, compared with ₹1.5 lakh to ₹2.5 lakh for entry-level cars a decade ago.
“The first-car category has evolved, and this change is reshaping the wider auto market,” said Suraj Rajappan, MD and CEO, Kotak Mahindra Prime Ltd.
The company has observed rising first-car loan ticket sizes and greater comfort with loan tenures of five to seven years among younger borrowers. While a longer tenure can reduce the monthly EMI, buyers should compare the total interest payable over the loan period before deciding how much to borrow.
Car insurance: Compare coverage, not just premiums
Insurance is another expense to consider when buying a new vehicle. Third-party motor insurance is mandatory for vehicles used on public roads, but buyers can compare authorised insurers and evaluate policy coverage before purchasing.
Niharika Saigal, Head of Insurance and In-APP Categories at PhonePe, says company’s app allows buyers to compare car and two-wheeler insurance quotes and select available add-ons such as zero-depreciation cover, engine protection and consumables cover.
These options can affect the premium, so buyers should check the policy terms, exclusions and deductibles before choosing a plan.
New car or pre-owned vehicle?
Kotak Prime has also pointed to the growing role of organised pre-owned car platforms, certified inspections and warranties in making used vehicles more accessible to buyers.
A pre-owned car may offer access to a higher vehicle segment at a lower purchase price. However, buyers should compare the vehicle’s condition, service history, repair costs and financing terms before deciding between a new and used car.
For first-time buyers, the key is to assess the overall cost of owning the vehicle rather than relying only on the advertised price or EMI. Factoring in loan repayments, insurance and maintenance can help them make a more informed purchase this festive season.