Buying a car – Car loan or full cash payment?
At the time the product is decided, following barrier is payment. Now most of the personal and public banking companies offers up to 85% of the complete quantity as personal loan, that also at attractive premiums. Also some accumulate funds in excess of time to satisfy their want, they prefer to go for entire funds payment, primarily to avoid paper do the job and the curiosity payment.
In this write-up, we are doing some tough mathematics to see how significantly you would be overpaying if you are using personal loan alternatively of funds payment. As we talked about, it is a tough calculation, not all components are coated.
Suppose the expense of the car or truck you are planning to buy is Rs. five,00,000(5L) and you are availing a personal loan of Rs. 1,00,000(1L).
So the EMI with curiosity fee of 10.five% for a reimbursement period of 36 months would be all around Rs. thirteen,001. In 3 several years you will repay Rs. 4,sixty eight,036 (36 x thirteen,001). So, at the finish of 3 several years, complete quantity put in on your car or truck would be all around Rs. five,sixty eight,036. Let’s take into account the curiosity misplaced on the EMI paid out for three several years, it will arrive all around Rs. 64,401, so complete expenditure would be Rs. 6,32,437.
Suppose you have Rs. 4,00,000 funds in hand but put it in a preset deposit plan with an curiosity fee of 8% and then heading for personal loan. You will be earning an curiosity of around Rs. 1,01,044 in excess of 3 several years period for Rs. 4L you deposited. So, let us deduct the curiosity you attained from the expenditure, Rs. 4,sixty eight,036 – Rs. 1,01,044 = Rs. 3,sixty six,992. So, complete expenditure would be Rs. 5,31,393 if you continue to keep 4L in FD and take 4L personal loan.
1L Money & 4L personal loan: Full expenditure(just after 3 several years): 1L(down payment) + Rs. 4,sixty eight,036(EMI paid out) – Rs. 1,01,044(curiosity attained from FD) + Rs. 64,401 (Interest misplaced on EMI paid out) = Rs. five,31,393
If you have paid out entire quantity all through the obtain, the calculation would be:
Money payment: Full expenditure(just after 3 several years): 1,00,000 + 4,00,000 + (Interest misplaced on 4L = 1,01,044) = Rs. 6,01,044
So, what is the summary? You can help you save some quantity if you go for car or truck personal loan! Intriguing, just isn’t it? If you disagree with the calculation presented, come to feel totally free to write-up it in the comments area.
Disclaimer: This is just for illustration function only, you should verify with your bank for the hottest curiosity fee and other phrases and conditions.