I have recently purchased a Lancer for 3.5 Lacs, 2001. Thought it has run 40, 000 KMS. It is so quiet and the test drive alongwith an automobile engineer made me buy it as there are no squeks and sounds inside.
Believe me, this car is so powerful, that you feel it when you push it on the second and third gear. And offcourse good things come under a good cost.
I had an option of Honda City but I took Lancer as ther performance seems to be relatively same, though Lancer has the upper hand.
Honda City 1.5 EXi has a better milage and that is the only advantage that it has over the Lancer.
When it comes to Style, Lancer is the only car in this budget that you can get. Also, suspension seems to be a problem for Honda City.
I have driven this car before as my friend own one. Believe me, he has never complained of anything other than milage, which offcourse can be overlooked as the car gives you so much power that you will forget the milage issues.