Is it advisable to buy a good car at this point?
Guys, I have a monthly salary of 40000 rs(8 years in IT) and I am thinking about a switch and learning for it. My husband joined a company on Feb 5 and his monthly expected salary is around 65000 rs(5 years in fincrime). We have around 5-6 lakhs debt, which we are repaying based on requirements. We are seriously thinking about buying a car as we have a 10 month old baby and travel is difficult without a good car, hence we are planning to buy kushaq ambition automatic (~18 lakhs). We don't have money in hand thinking about taking a loan of 12 lakhs and rest by pledging gold. Do you think we made the right decision to buy a car now. We have a 15 year old Alto now.
If possible go for 2nd hand car within 3lakh. Your first priority should be to pay off debt.
why does it have to be an 18lakh car, why not something like a punch automatic that costs half of it
RealOldmonk
Stealth
7 months ago
Rule of thumb I follow is buy a car which is 1/3 price of your CTC(excluding stocks) at max, anything beyond this price is most likely a childhood dream, some aspirations. Because this will add on to your debt.
With loan hovering around 9.2-9.5 percent, your interest itself will amount to 3-4 lakhs
RealOldmonk
Stealth
7 months ago
With around 1L in hand salary and 5-6 lakhs of debt your emi will be around 26k on a year loan, almost 25% of your total salary. Bad financial judgment. House is rented or own? EMI on house?
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Thank you so much guys 😊, We had second thoughts, that's why I asked here. As most of you suggested, we have listed out the pros and cons and decided not to buy kushaq now.
I’d suggest a cheaper car. If you’re buying fresh, get something under 10L, or if you want something with performance and top quality, buy second hand. Get a used 2017 or 18 car, there are many options. venue, sonet, brezza, ecosport, kiger. All under 10L
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ericcartmanchan
Stealth
7 months ago
For first time car owning, going second makes a ton of financial sense. You will anyway change/upgrade cars every 8/10 years, and for next buy you will have better income/savings plus will need to move to a larger vehicle than hatchback.
ericcartmanchan
Stealth
7 months ago
Saying this as to run a car with 5lakh on road price after taxes, you will need additional 2-3 lakhs that you will spend on it for insurance, repairs, maintenance and other non fuel expenses in the initial few years. So account for this also while budgeting possible EMIs that you will set back by for the proposed car you mentioned in post.
Also if you approach car purchase for social signalling like most families in India love to, then all the advice here may not matter.
Driving in city traffic is no fun and is mainly a utility that you definitely need with the toddler for convenience and safety that no 2 wheeler or depending on autos/cabs can give.
majboormajdoor
Stealth
7 months ago
Financially, it will make your life hard.
Cars increase costs due to insurance, maintenance and fuel (less for electric). The expense on the car might divert the money from others like school, higher education, lifestyle etc.
How many km would you drive per month with the baby? If the number is not that high, you might be better off using Alto+Cabs and postponing the car later.
Hire a personal finance adviser who wud suggest options in the middle. Relatives and friends usually encourage buying cars without caring about fin health
We wish to travel a lot. We badly wanted to buy it but now when thinking about the debt, we are having second thoughts . We even went to the showroom to check the car today. Thought of initiating the loan process tomorrow.
Qwerty2398
Stealth
7 months ago
so true.. there are so many additional cost that people dont plan when buying a car. Operating it will cost a lot of money.
"travelling" is so overrated. Its expensive. After 3/4 trips, it looks more like a chore than anything,
GlassSkin63
Stealth
7 months ago
No way. Since you have an alto and a loan, the answer is simple. Use the alto and pay off the loan along with creating an emergency fund. Keep the gold as emergency fund till then.
I'll tell you why this is important. My friend got the same model you shortlisted last year and he is at Google with a take home of 15L per month. I watched him move from nothing to a very financial secure position purely through financial discipline and very good decisions on money front (he was settled financially even before he joined Google).
Your baby would also appreciate not having to worry too much about money in the future than traveling in the new car today.
Don't over-leverage yourself over luxury purchases.
Remember the 20-10-40 rule in personal finance.
- You should be able to pay 20% of the value as downpayment without taking another loan or pledging gold.
- The EMI shouldn't exceed 10% of your net income.
- Tenure of loan should be 4 years.
I wouldn't recommend second hand vehicles since you will be taking a loan and interest rates are much higher for them.
Moreover I feel that they are overpriced, atleast in Bengaluru.
A Tata Punch automatic fits the bill, well priced and good safety.
GlassSkin63
Stealth
7 months ago
Does the 20-10-40 rule apply to home loans as well? Is there some better resource to read about it
@GlassSkin63 , home loan shouldn't have a tenure > 20 years, emi > 35-40% of net income and you should be able to make 20% as downpayment.
Different credit lines have different rules applicable.
A car will be worth half in 7-8 years and nothing in 15 years.
It works differently for an home.
Most information on personal finance is available online and more recently through chatgpt.
Mxmaster
Stealth
7 months ago
Would recommend a resale rapid/ecosport etc These are safe (have isofix) for baby, reliable and also great for long distance trips (1000km+). Clear off your existing debts and you can get your Kushaq in 2-3 years once your financial situation improves.
Buy a celerio CNG second hand. Invest the money in stocks. Upgrade the car after 5 years
Brutallyhonest
Stealth
7 months ago
Do what you love, why ask social validation for these. I am sure you dint ask for other major decisions in your life. Such as family and kids. Why ask for just the purchase of the car. There is no fixed formula. You like it, you need it, you buy it. What works for someone might not work for you. Hence ✌️
Bad idea. Kushaq maintenance is high. All vw cars have high maintenance cost. I make 3lpm and still living below my means. I bought a used polo gt tdi. Fun to drive car, and serves my purpose of going from point A to point B. Get rid of your liabilities first. Don’t add more to it.
Sabre
Student
7 months ago
You work in product or swe?
These cars cost a lot to just use. Budget at least Rs 15 per KM for fuel and maintainence apart from the EMI. Better to go with a good 2nd hand car at below 5L and use it for a few years.
I have an update to share, we bought a 2018 model ecosport. Thanks for your suggestions 😊
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