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    Thread: Consumer Opinion: Is it wise to buy Cars without Loan, with 100% down payment ?

    1. #21
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      I see peace of mind , but I think what most of them miss is aspiration .

      For a salaried class , especially a first time buyer I would suggest at trying to generate additional income rather than buy a car . For example , when I started out with my business I invested most of the money on building another floor on top of my house . I could have used the money to live off comfortably , bought a car or even got drunk . Eventually , I built around 6 portions with the money from business and some hand loans . I took it slow and did the construction only when I had money in my account . Now , my household expenses and even my savings come from those 6 houses rentals . It gives me more peace of mind to not mind about paying driver salary , fuel expenses , school fees , taxes etc .

      My suggestion would be to try and buy property , even a single bedroom apartment . Usually the smaller ones have much higher demand than the bigger ones . Relieve yourself of attending to family expenses and then plan your own path . It gives me a lot of peace to plan my next move than have a few odd lakhs in the bank .

      I suggest buying cars on loan .I always try to have emi lined up , so when my car loan gets over I buy another car , land , apartment etc . When you do not have commitment /aspiration you are just a human in existence . When you have a commitment then one strives to excel at work , excel at what he/she does . you always try to move up the ladder and not get tired because you get to experience the better things in life . You also have the satisfaction of leaving something behind for your kids .

      Many of us lose the plot , after planning so much , writing down expenses while a road side broker with no formal education suddenly appears in front of you whom you have know a few years back as a house broker in a mercedes . It is not fate . Sometimes it has to do with common sense as well . People talk of mutual funds , shares etc but all their life they have just managed to buy a house and live off comfortably with no real asset or liquidity .

      Lastly , never count wife money as your own . You then end up being a listener with a lot of patience .

    2. #22
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      Answer to OP: If you have the moolah, Yes, it is wise. Cars are depreciating assets. There is no point in paying interest on a fast depreciating asset.

    3. #23

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      Quote Originally Posted by the4wheeler View Post
      Answer to OP: If you have the moolah, Yes, it is wise. Cars are depreciating assets. There is no point in paying interest on a fast depreciating asset.
      Sometime even with moolah,one has to take a loan because of taxman.

    4. #24

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      Quote Originally Posted by sparkls View Post
      Sometime even with moolah,one has to take a loan because of taxman.
      If one's account are clear (i.e. tax has been duly paid), then no need of being afraid of taxman. Tax paying people need not worry at all about buying car without a loan.

    5. #25

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      Quote Originally Posted by speed79 View Post
      If one's account are clear (i.e. tax has been duly paid), then no need of being afraid of taxman. Tax paying people need not worry at all about buying car without a loan.
      True, but most of the buyers of costly cars are the ones who dont pay or atleast who operate in grey area.

    6. #26

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      Quote Originally Posted by sparkls View Post
      True, but most of the buyers of costly cars are the ones who dont pay or atleast who operate in grey area.
      Bias Alert
      Some of my Threads:
      https://gearheads.in/showthread.php?24908-My-WOWA-Waterless-Wash-amp-Wax-Experiment
      http://gearheads.in/showthread.php?25158-Sunday-Detailing-my-Honda-Amaze
      http://gearheads.in/showthread.php?25582-The-Battle-of-Waxes

    7. #27

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      It is wise to take a loan. And that is not because you have cash already in pocket. Unless it is costing you peanuts.

      Reasons:
      1. Ofcos, if interest rate you getting it is significant lower than bank interest rate ( risk free rate ) then definitely makes sense to take a loan.
      2. Credit history: Well if you do not take a loan your CIBIL score would not move. So, to build a better credit history ( though this will be secured loan ) however still it counts and results in better scorecard in case tomorrow you want to take a bigger loan.
      3. Relationship with Bank: Take a loan if its at a better interest rate as possible from bank you maintain your accounts with. This inturn helps in maintaining a significant relationship, while you can negotiate on interest rate, plus risk managers understand easily your appetite / default risk. This inturn ensures if anytime in future you need a unsecured loan or home loan it is fast process and with a good negotiated interest rate.

      Hope this helps.
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    8. #28
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      Quote Originally Posted by speed79 View Post
      I don't prefer a life with loans, but sometimes we are bound to take loans.

      When I had bought my second car, vista, in year 2011, I had bought it at 50% down payment for on road price of 6l, though I had cash (all tax paid, lying in my bank account) more than 40 times my loan amount, all because I was looking to buy my first house and wanted to buy the house without loan, which I did 3 months after my car purchase. As I had cash left after house purchase, I paid the full loan in next 3 months. Even though the loan amount was small at 3l, I felt relief at closing the loan.

      Next I had to take loan of 30l to buy plot adjacent to my house, which constituted about 30% of plot cost, and I closed that loan within a year. All because I do not like living under burden of loan.

      My next car purchase, in my company's name, all on cash and no loan, despite the so called benefits of the loan. For an entrepreneur, a loan is a big headache and should be avoided as it might effect peace of mind and future actions due to loan liability.

      If I look back, in year 2007, I could have bought a very nice house (double of my current house) for 1.3 cr after taking loan of 50% of the amount. I was part of another company at that time. In year 2009, due to some reasons we had toclose that down. With a new set of people, I started a new company, and I was able to finance the sustainance of company and also could support my new co-founders who had not much stronger personal financials and also take care of my family expenses for a year, until new company started to generate revenue. All this was possible due to liquidity, else I would have been searching for a job at that time. So it helps. I missed on that beautiful big house but not taking loan to buy that house proved to be a good decision.

      So I have bought car/house/plot both with and without loans. It all depends upon the financial condition at that point of time.

      Edit: I know a fellow entrepreneur who had to stop trying as business did not do good, and was forced to take up job to pay his house loan emi his words of advise were, never take loan if you are an entrepreneur.
      I agree that loan pressure is not a good thing. Calculating expenses per month and yearly basis and based on financial situation only one must take loan and see if it is affordable but paying a big amount in one time is not likely for average Indian TBH

    9. #29
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      Quote Originally Posted by Tj seera View Post
      It is wise to take a loan. And that is not because you have cash already in pocket. Unless it is costing you peanuts.

      Reasons:
      1. Ofcos, if interest rate you getting it is significant lower than bank interest rate ( risk free rate ) then definitely makes sense to take a loan.
      2. Credit history: Well if you do not take a loan your CIBIL score would not move. So, to build a better credit history ( though this will be secured loan ) however still it counts and results in better scorecard in case tomorrow you want to take a bigger loan.
      3. Relationship with Bank: Take a loan if its at a better interest rate as possible from bank you maintain your accounts with. This inturn helps in maintaining a significant relationship, while you can negotiate on interest rate, plus risk managers understand easily your appetite / default risk. This inturn ensures if anytime in future you need a unsecured loan or home loan it is fast process and with a good negotiated interest rate.

      Hope this helps.
      If you want to build your CIBIL score or want to take a loan , buy an asset that appreciates , like an apartment or land. It is stupid to pay interest on depreciating asset like vehicles and electronics. Of course if you don't have money now but still want to buy a car then get loan from sources with low interest like a friend or company or society loan or buy VW which always runs a zero % EMI scheme

    10. #30
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      Quote Originally Posted by the4wheeler View Post
      It is stupid to pay interest on depreciating asset like vehicles and electronics
      I have heard this multiple times - but have not been able to understand the logic behind this. Can you please give some statistical / financial explanation to this? To me, a loan (for car / house / personal etc) is a financing instrument and it barely has an impact on the purpose it is going to be used for.

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