A practical guide to vehicle costs
A vehicle is the one large purchase most people make knowing it will lose value. That makes the financing question different from a home loan: the asset shrinks while the debt amortises, and the running cost over five years often rivals the purchase price. These calculators cover both halves — what the loan costs, and what it costs to keep the vehicle moving.
Formula
Cost per km = fuel price / mileage
- For petrol or diesel, mileage is kilometres per litre and fuel price is the pump rate per litre
- For an electric vehicle, substitute energy consumed per kilometre and your electricity tariff per unit
- For CNG, use kilometres per kilogram against the price per kilogram
- Running cost is only part of ownership; depreciation, insurance, and servicing sit on top
Ex-showroom price is not what you pay
The advertised price excludes road tax, registration, insurance, and usually a handling charge. Road tax alone varies widely by state and can run from around 6 to 14 per cent of the vehicle value. Add first-year insurance and the on-road figure typically lands 10 to 15 per cent above the ex-showroom number.
Lenders fund a percentage of the ex-showroom or on-road price depending on the scheme, so the gap is cash you must find. When the EMI calculator asks for a loan amount, enter what you will actually borrow after the down payment, not the price of the car.
Depreciation is the largest cost nobody budgets for
A new car commonly loses 15 to 20 per cent of its value in the first year and roughly half by year five. On a ₹10 lakh car that is around ₹5 lakh of value gone, which usually exceeds the total interest paid on the loan. Two-wheelers depreciate on a similar curve.
This is the strongest argument for considering a well-maintained used vehicle two to three years old: the first owner has absorbed the steepest part of the decline. It is also why stretching a car loan to seven years is risky — you can end up owing more than the vehicle is worth, which becomes a real problem if it is written off or you need to sell.
Running costs compound quietly
A petrol car returning 15 km per litre at ₹105 per litre costs ₹7 per kilometre in fuel alone. Drive 1,200 km a month and that is ₹8,400 monthly, or about ₹5 lakh across five years — comparable to the depreciation and far more than most buyers expect.
Servicing, tyres, and insurance renewals add further. When comparing two vehicles, the one with a lower sticker price and poorer mileage can easily cost more over five years, which is exactly the comparison the fuel cost calculator is built to settle.
Electric and CNG: where the maths turns
An electric vehicle typically consumes around 15 units of electricity per 100 kilometres. At a domestic tariff near ₹8 per unit that works out to roughly ₹1.20 per kilometre, against ₹7 for the petrol car above. Over 1,200 km a month the saving is close to ₹7,000.
The catch is the higher purchase price, which means EV economics depend heavily on how much you drive. A high-mileage user recovers the premium in a few years; someone driving 400 km a month may never recover it before the battery warranty becomes the dominant concern. CNG sits in between, with a smaller price premium and a smaller saving, and the practical costs of boot space and refuelling queues.
Charging at a public fast charger rather than at home changes the EV calculation considerably, since commercial tariffs can be two to three times a domestic rate. Enter the tariff you will actually pay, not the best case.
Insurance and the claims trade-off
Third-party cover is legally mandatory; comprehensive cover is not, but it is what protects the vehicle itself. Premiums fall over time as the insured declared value drops, and a no-claim bonus can cut the own-damage component substantially after several claim-free years.
That bonus is worth protecting. For a small dent, paying out of pocket is often cheaper over the next few years than surrendering an accumulated discount, especially once you account for the policy excess you would pay on the claim anyway.
Worked example: a ₹10 lakh car over five years
- Ex-showroom price
- ₹10,00,000
- Estimated on-road price
- ₹11,50,000
- Down payment (20%)
- ₹2,30,000
- Loan at 9.5% for 5 years
- ₹9,20,000
- Monthly EMI
- ₹19,321
- Total interest
- ₹2,39,260
Across five years the loan costs about ₹2.39 lakh in interest, fuel at 1,200 km a month adds roughly ₹5 lakh, and depreciation removes close to ₹5 lakh of value. The ₹10 lakh car is therefore nearer a ₹12 lakh commitment once running costs are counted, before servicing and insurance renewals.