Suggestion needed on Car loan down payment or full payment

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pc.pc.user
I was doing some calulations. Pls correct me if I'm wrong and suggest best.
Assume Car is worth 10lakhs
1. Full payment of 10lakhs.
        0 money to invest
2. Down payment of 3 lakhs.  
        Loan of 7lakhs emi 14k for 5 years. 
Total payment: 8.7L + 3L = 11.7Lakhs.
Remaining 7lakhs to invest.
a. Assuming 10% return for 5 yrs in sip= 11.25lakhs -32.5k tax
b. Assuming 7% fd return for 5 yrs = 10lakhs - 30k tax
c. Assuming 15% return on sip = 14 lakhs - 60k tax
Car cost Breakthrough in a&b and gain 3L extra in c

3. Down payment of 5 lakhs.  
        Loan of 5lakhs emi 10k for 5 years. 
Total payment: 6.2L + 5L = 11.2Lakhs.
Remaining 5lakhs to invest.
a. Assuming 10% return for 5 yrs in sip= 8 lakhs - 20k tax
b. Assuming 7% fd return for 5 yrs = 7lakhs - 18k tax
c. Assuming 15% return on sip = 10 lakhs - 40k tax
No car payment Breakthrough

4. Down payment of 3 lakhs.  
        Loan of 7lakhs emi 14k for 5 years. 
Total payment: 8.7L + 3L = 11.7Lakhs.
Remaining 7lakhs to invest.
Invest 1lakh each in 7 good quality shares:
a. Asssume 30% in 5 yrs 1.3*7= 9.1 Lakhs -20k tax
b. Assume 50% in 5 yrs
1.5*7 = 10.5 lakhs - 30k tax
c. Assume 100% in 5 yrs
2*7 = 14lakhs - 70k tax
Car cost Near Breakthrough in option a&b and Gain of 3L in option c

Assume i sell for 5lakhs after 5 yrs that extra 5l in my pocket even after using car for 5yrs

Is my calulations correct and which option should i go  if planning to buy car in 2024.
Option 1 no point of opting
Option 3 is also not feasible
Option 4 is risky and needs research
My goto option 3.
Suggestions welcome
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Deal Cadet Deal Cadet
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go for option 1 .  full payment. you never know market in short term of 5 years . you may not even make 10 % let alone 15%. shares are worse than mf according to my opinion. even a sebi registered advisor produced 12-14% in short term/ medium term stocks in my case . but my mf portfolio generating 22% xirr .

Finance Mentor Finance Mentor
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Deal Cadet Deal Cadet
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yeah achi bat nahin 
calculation kuch bhi ho
ho toh yeh apna desi dimer londa
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Helpful Helpful
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Option 4 isn't risky. It is expecting miracles.

Option 2 is the most reasonable option.

You have to remember that 10k today is worth more than 10k in the future. Also consider reducing the EMI tenure if you're paying 5 lakh upfront instead of 3 lakh. 

Post Emperor Post Emperor
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Try SWP

Deal Cadet Deal Cadet
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Loan of 7lakhs emi 14k for 5 years.

auto loan rate of interest ?

auto loan any other fees , charges ?

Assuming 10% return for 5 yrs in sip

Not realistic based on historical data of top mutual funds able to deliver 5Y Returns (Annualized) % of 20 + - excluding fees etc

What if Israel goes to War with Iran & Putin invades Finland & China implements Article 370 in Taiwan & Sensex goes bust then can you still satisfy your bank master & afford emi out of own pocket

I think more suitable for a rich n199a with rich cashflow who can afford the costly emi anyway & that too cash rich so is able to gamble the money in sip instead of paying the car dealer


Deal Cadet Deal Cadet
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First, check with your bank to see if you are eligible for a car loan. If not, pay in full upon purchase.

If the bank says they are willing to lend you a car loan, calculate if, after paying 10+ lakhs from your savings, if you are left with sufficient savings to meet financial emergencies for the next 2-3 years. If not, go with the car loan. In your case, a 3-year loan would be ideal.

A car is a proportionately large drain on the owner's savings, and the reality starts kicking in as the car gets old and its value keeps depreciating right in front of your eyes. For people who are worried about saving as much as possible, the car becomes an everyday reminder of how just one item in the house ruined all your years of financial savings philosophy. (Rising fuel cost, maintenance costs, comprehensive insurance, extended warranty, etc. are constant drain from your salary or whatever.) Since you are making so many calculations on how to save as much as possible, think twice if you actually need to waste your savings on a car.

Deal Newbie Deal Newbie
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Whats the issue in making calculation? Its my hard earned money and i can think of it.

The calculation is purely the car payment which doesnt include maintenance,  fuel, insurance etc. I can handle that.

My existing mf is generating more than 18% xrr including covid, ukraine war and recession. Whats worse that can happen again? I guess 10% expectation is not imaginary.

Deal Cadet Deal Cadet
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Take maximum possible loan. Invest in equity or mutual funds, you'll surely get more benefit on and above loan interest amount.

Commentator Commentator
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If you are rich then go for loan (option 2).  If you are middle class then don't use loan.

Deal Cadet Deal Cadet
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I myself bought a car brezza approx 14 lakh by using credit card which should have been an option. by using credit card you are generating 2% of 10 lakh.

I generated approx. 2% profit from it. I sold my mf for buying my car so you may think i didn't do my calculation. but you guys are forgetting that market are unpredictable. I am myself generating 22% xirr but i still chose to buy the car upfront. 

another thing is you will be doing monthly swp to pay emi which you have not considered in the calculation.

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with 12% you are getting profit of 74k -20k tax - 14k (cc benefit)=40k ,but it is in consideration that market don't crash in 5 years. else more unit of mf will be used and you will have no profit maybe a loss.

All banks were ready to give me loan with hdfc preapproved car loan of upwards of 15 lakh.

screenshot of my portfolio.

image

Deal Cadet Deal Cadet
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I myself bought a car brezza approx 14 lakh by using credit card which should have been an option. by using credit card

ye baat kuch hazam nahi huyi

mdr% ke liye kya govt subsidy mila 
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