With a rising middle class in India, the sale of four whellers has picked up substantially over the past decade. In fact owning a car is now considered necessity by the present generation. India today is treading on the paths of other industrialized nations and the days are not far when every household in India would be having a four wheeler of its own.
Cut to today, when you decide that even you need to have a car of your own, there are certain things that you should remember. First of all buying a car is not an investment decision as it is an asset that has depreciable life. As such any decision to buy a four wheeler should be carefully considered with all pros and cons.
Cost of Car
First thing that forms the crux of buying decision when it comes to four wheelers in general and cars in particular is the cost. It is always better to do a budgeting and based on your buying capability, zero in on the car that you want to buy. The budgeting should be done carefully because there always is a difference between the estimated price and exact price of the cars available in the showrooms. Apart from that if you are planning to take the car on loan then the EMI that you are going to pay will be finalized by the banks that finance your vehicle!
Buying with cash or Loan
If you have sufficient cash with you, then it is always advisable that you finance your car purchase yourself. Car is a depreciable asset. As such financing its purchase with a loan does not make good financial decision. Having said that, if you don’t have sufficient savings at your disposal, you have no other option but to take the help of banks in getting your car financed.
In these circumstances you need to be ready with all documents before you approach a bank to finance your loan. Most of the banks in India offer loan up to 85% of value of the car. The rest 15% needs to be put in by the buyer! However if you can arrange for more amount as down payment, the amount of loan you are applying for will be reduced to a great extent. This will significantly reduce the loan duration along with the payable EMI. In general, try to reduce the tenure of loan to as low as possible as it would save considerable interest payment. In general banks allow 5-7 years tenure for repayment in case of car loans.
Other Expenses Associated With Car Purchase
There are other expenses associated with the purchase of a cr which need to be planned for in advance. Insurance is one such item. A car that costs you Rs 10 lakh would demand a premium of Rs 30,000 in the first year itself. Apart from this there are other maintenance expenses that need to be taken care of.
So while you have taken the decision to buy your car, please do your pre planning and pre budgeting with intricate delicacy so as to avoid any major financial mishaps in the future.