In my friend`s case, she could have bought a car in the middle segment without resorting to a car loan. Unfortunately, group pressure and marketing from the car company and the bank`s pitch loan urged them to increase the budget from 7L to 20L. I suggested to him against car credit and explained some of the reasons for this. In this article, I will discuss, for the benefit of readers, the same 7 reasons I shared with my friend. In the case of a car loan, the partial/full payment fees are quite high. In some cases, it may be advantageous to continue the car loan instead of a partial payment or seizure. Fees may vary from bank to bank. For special offers, these fees are sometimes waived. Some banks do not allow advance payment or seizure for 6 months / 1 year of car credit. In addition, you can not pay more than X% of the loan amount in advance, subject to a maximum ceiling of 25% of the capital during the year. Today, marketing communication has shifted to premium segments such as SUV, XUV or Premium Fließheck. Today, car buyers also use a car credit to upgrade, but to switch from small car/rear to premium segment 🙂 to put to more aquer. Nowadays, driving a small car is like driving a 2-wheeler.
On a lighter note, a friend in Delhi bought a 20L premium car as a car loan simply because her girlfriend bought 17L XUV. I`m waiting for his girlfriend 🙂 on a 25L luxury car. In the example I shared, the interest to be paid will be about 1.29L. Therefore, the actual cost of the car will be 8.29L. By using a car loan, I increased the cost of the car by about 18%. In the case of a home loan, the increase in the value of the property and the rental value neutralize the interest costs. Unfortunately, this is not true for a car loan. It therefore implies that the borrower is not able to manage the finances well. If you look at things differently, if you take into account the average savings rate of 30% in India. You can save on your income in 18 months for the purchase of a car. If it`s difficult, something is wrong somewhere.
If you are planning a home loan in the next 3-5 years, it is not advisable to resort to a car loan, as this can have a negative impact on the CIBIL score and reduce your future eligibility for credit. A car loan is a low-value credit compared to your salary. There is a paradox, for example. B if the approved credit is high, it means that your income is high. The question of millions of dollars is, if your income is high, why you resort to a car loan. It is understandable in the case of a home construction loan, as the property has a strong purchase of tickets, but this is not the case for a car loan. Normally, the approved auto credit is 6 times your monthly salary/income. In my opinion, buying a credit asset makes sense from a personal financial point of view and the car does not qualify in this category.
A car loan is like buying a share for a loan that we know in advance that the stock will definitely decrease by 50% over the next 3 years. Are you going to invest in such stocks? If the answer is NO, the same goes for car loans.. . .