Festive season is the busiest time for car showrooms. According to reporting by Exchange4Media, car sellers and insurance sellers are now competing for the same buyer.
For you, that means a car purchase can come with extra insurance offers. Compare each one, ask what it costs, and decide what you truly need before you sign.
Key takeaways
- Car dealers and insurance sellers are both chasing festive buyers, as reported by Exchange4Media.
- An insurance add-on can be rolled into your car loan, which raises your EMI.
- Financing a premium means you pay interest on it too.
- You can compare quotes and ask for a written breakdown before you agree.
- Don't let a festive deadline rush your decision.
How the car and insurance pitch works
When you buy a car, you need insurance. In India, basic third-party cover is required by law. So the showroom, the lender and outside insurers all want to be your choice.
A dealer may offer a package with the car. It can include own-damage cover, add-ons and even extended warranty. The price often looks small when it's spread over many months.
That's where care is needed. A small monthly amount can hide a bigger total cost. Ask for the full premium in rupees, not just the monthly figure.
What it means for your EMI: a worked example
EMI means equated monthly instalment. It's the fixed amount you pay your lender each month. Let's use a simple example with round numbers.
Say you borrow ₹8 lakh at 9% a year for 5 years. Your EMI comes to about ₹16,607. Now say a ₹40,000 insurance premium is added to the loan. You then borrow ₹8.4 lakh, and your EMI rises to about ₹17,438.
| Option | Loan amount | Approx. EMI | Total you pay over 5 years |
|---|---|---|---|
| Car only, premium paid separately | ₹8,00,000 | ₹16,607 | ₹9,96,420 + ₹40,000 premium |
| Premium added to the loan | ₹8,40,000 | ₹17,438 | ₹10,46,280 |
| Difference | ₹40,000 | ₹831 | About ₹9,860 more |
These are illustrations, not quotes. Your rate and term will differ. You can test your own numbers with our EMI calculator.
Who is affected
First-time car buyers are most likely to feel the pressure. They often don't know which add-ons are optional. A festive deadline makes quick yes answers more likely.
Buyers who need a high loan are affected too. If your loan is already stretched, a bigger EMI can hurt your monthly budget. Check your room first with our eligibility check.
Buyers who pay a large down payment have more freedom. They can pay the premium in cash and keep the loan smaller.
What to do now
A few simple steps can protect your money. Do them before you sign anything.
- Ask for the insurance premium in writing, with each add-on listed.
- Get at least one outside quote for the same car and cover.
- Ask if the premium is being added to your loan.
- Check the loan total, not just the EMI.
- Skip add-ons you can't explain in one sentence.
If the dealer's offer is fair, take it. If it isn't, you can say no and choose your own insurer. For more on loan costs, read our personal loan guides. You can also follow more updates in our news hub.
Don't feel rushed by festive offers. A good deal will still be a good deal tomorrow.
Frequently asked questions
Must I buy insurance from the car dealer?
No. In general, you can pick your own insurer. Compare the price and cover before you decide.
Is it a good idea to add the premium to my car loan?
Usually not. You pay interest on the premium, so it costs more over time. Paying it upfront is often cheaper.
What insurance does a new car need by law?
Basic third-party cover is required for every vehicle on Indian roads. Other cover, like own-damage, is your choice, though lenders often ask for it.
BankCreds analysis
The headline sounds big, but the risk for you is small if you stay alert. An upsell is only costly when you say yes without comparing.
Take a family buying a ₹8 lakh car. If they finance a ₹40,000 premium, they pay about ₹9,860 more in interest over five years. That's real money, but it's not a disaster.
What this does not mean
It doesn't mean every showroom offer is bad. Some bundled covers are fairly priced. The point is to compare, not to refuse everything.
This week, ask for the premium quote in writing. Then get one outside quote on the same day. Buyers who pay the premium upfront and skip the loan add-on usually save the most.
This section is BankCreds' own assessment of what the development means for Indian borrowers and savers. It is independent commentary, not part of the source reporting above.
Sources & references
- Exchange4Media — originating report https://www.exchange4media.com/e4m-blogs-news/festive-car-sales-and-the-insurance-upsell-competing-for-the-same-buyer-160097.html
- IRDAI — insurance regulator; buyers can compare insurers and policy terms https://irdai.gov.in/
Source links are shown as plain text, not clickable links. Copy a URL into your browser to read the original report.
Editorial note & disclaimer
How this was reported. The development above is attributed to the source or sources listed. BankCreds does not independently verify a third party's reporting; where a figure or a regulatory position is stated as fact, it is either attributed or drawn from the regulator's own published material. Everything under "BankCreds analysis" is our own assessment.
Rates and figures. Interest rates, per-gram values and premium bands quoted here are indicative, move daily, and differ by borrower profile, city and lender policy. Confirm the final number with the institution before you act on it — the sanction letter or policy schedule governs, not a news report.
Not financial advice. This article is general information for an Indian audience. It is not investment, tax, credit or insurance advice, takes no account of your circumstances, and BankCreds is not a lender, broker, distributor or advisor. Consider speaking to a SEBI-registered investment adviser or a qualified professional before acting.
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