Orcl93

Buying a car on Cash or Loan?

Hi, we are thinking of buying a new car in Bangalore and contemplating on whether to buy in cash or on loan. Considering the traffic conditions, we only want a small car like i10 or Tiago. We do have cash on hand to buy a decent hatchback or sedan upto 10L. It will not burn all our savings for sure. However, I have seen so many people still buying on loan even though they have cash.

Would be interested in knowing what makes more sense for others. Especially want to understand if there are other benefits of loan apart from credit building. Other suggestions on car models are also welcome! TIA.

15mo ago

DarlesChickens

Razorpay15mo

Pay 20% as downpayment. Rest 80% on EMI for 4 years, Rest all cash. Save for rainy day so that in case of unknown events, you can foreclose the loan Easily.

Btw if Hyundai Exter NCAP comes good, thats a nice vehicle whst I ve heard.

Orcl93

Oracle15mo

Exter is on the list. Thanks :)

BhokaliGyan

Gojek15mo

How does paying car loan interest for 4 years make sense unless he is able to negate it with a better interest rate from his investments?

WildFoal7

Freelancer15mo

Pay 40-50% cash rest 5 year loan. Save money for emergency. Invest in good debt mutual fund if you are risk averse.

Orcl93

Oracle15mo

Thanks. Makes sense!

BhokaliGyan

Gojek15mo

Fd rates are better than debt mf rates right now.

SceneUnseen

Stealth15mo

If you're working with an MNC, check if they have a lease program which will save you about 2L overall on a 10L car.

Also kudos to you for choosing a small car. Lots of absolutely stupid mofos living in tiny gullies and buying SUVs.

Orcl93

Oracle15mo

My spouse’s company does have a good lease program. We haven’t compared it with other loans yet as they only joined in July, but we’ll consider that. Thank you.

SeriousProcastinator

Spinny15mo

If you are only buying for convenience you can look for a second hand car. It will depreciate slow.

Orcl93

Oracle15mo

I agree the depreciation will be slower. We did consider this option but after comparing the prices of second hand vs new, it made more sense to buy a new one.

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