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Factors That Affect a Car Driven in a City

Meeta Sabnis Meeta Sabnis 12 July 2016

What are most prevalent factors that affect a car driven in a city? Learn what kinds of expenses are involved when you own a car in a metropolitan city.

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Situation: You are pleased with your newly purchased sedan. The insurance premium is affordable and with flexible EMI’s you are confident of having bagged a good deal. Then you speak to your cousin from a smaller suburban town, who got the same car - and the same model. But his ex-showroom price is lower, along with insurance premiums - though he opted for a higher insurance plan!

How’s that possible?

Well, the geographical locations play a crucial role in determining your car prices. Like it or not, the prices you pay for an automobile differs from one state to another in India.

State taxes, fees and other similar costs

Oh yes! Even in India, state taxes for vehicle owners vary. First and foremost, the ex-showroom prices are different. For instance purchase value tax in Mumbai is 15% as compared to Pondicherry, which is just 1%. Also, in some union territories, the overall taxes are much lower.

Taxes that influence prices include-

  • State level sales taxes
  • Octroi charges
  • Logistic and handling charges
  • Registration charges - some states have really high registration charges

Fuel costs

One of the biggest influencers in car buying decision these days is fuel costs. Diesel is cheap and economical, but the diesel version of a car is significantly more expensive than the petrol.

Also, the same petrol costs about Rs. 68 per litre in Kolkata, while in Mumbai it could be close to Rs. 71. And if you go to smaller cities like Bhopal or Bhubaneswar, it could be way lower - closer to Rs. 65. So, owning a car in a metropolitan city is costlier.

Higher risks means higher insurance

A bigger city comes with its fair share of risks, which includes thefts, vehicle damage, accidents, etc. There is more of congestion on the roads, traffic snarl - people in a rush to get to work. As a result, your swanky new car doesn’t stay that way for very long - no matter how hard you try.

Due to the higher risks involved, car insurance companies shoot up their monthly premiums. On the contrary, living in a small city has fewer risks of car damage. There is less of congestion and lower crime rate too. So, your premiums go down automatically.

Overhead maintenance cost

As a car owner, if you are living in a bigger city, the overall maintenance costs shoots up. Car mechanics service fees are literally over the roof. And then spare parts cost you more too.

Again, taxes and other implications are a contributing factor for the costs to go high. So every time you are changing tires or investing in some spare, costs shoot up.

Resale value

Cars in smaller cities are in much better condition when it comes to performance and maintenance. Thus, they have a higher resale value. In bigger cities, traffic snarl and constant release of the clutch and break causes a lot of damage to the engine.

These are some factors that differ from city to city. You probably think why not buy a car in the smaller town and register the same in your city. But the legal complications and tax hassles can be overwhelming - leading to almost similar costs. So work these out before investing.

Meeta Sabnis
Written by Meeta Sabnis
Her mantra in life is to dream, and dream until you turn them into reality. A neurotic Kajol fan, Meeta loves spending time with her gorgeous twins, ensuring a childhood they’ll be proud of. Bargain hunting, crazy dancing and romancing alphabets are some of her other cravings. She’s currently a Content Writer at Coverfox.