100% on-road car financing advertisements are tempting because you can drive home a brand-new vehicle without putting down a single rupee of initial capital. But what is the true financial trade-off?

1. The Hidden Cost: Higher Interest Premiums

Lenders view 100% financing as higher risk. As a result, banks either charge a 0.5% to 1.5% higher interest rate or insist on expensive mandatory bundled add-ons.

2. The Risk of Negative Equity (Being Upside Down)

New cars lose approximately 15% to 20% of their market value the moment they leave the showroom. If you finance 100% of the cost, your outstanding loan balance will exceed the resale value of your car for the first two years.

3. Best Financial Recommendation

Whenever possible, pay at least 15% to 20% down payment. It ensures healthier debt-to-income ratios and lowers your monthly cash-flow pressure.