Think Before Taking a Car Loan!

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Thinking of taking a car loan? Hold it right there! Did you know that the value of a brand new car depreciates by 20% when you drive out of the showroom! Add to this a 15% depreciation in value each year (assuming normal wear and tear) the govt recommends!

This implies in the first few years and certainly before you pay out the loan the value of the car will be lower than the balance in your car loan!

Suppose you didn’t take the car loan but instead invested an amount equal to the EMI you intended to pay, could you buy an used car in 2-4 years and safeguard yourself against the initial steep depreciation in car value?

Use this calculator to find out!

Download the Think Before You Take That Car Loan Calculator!

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About the Author M Pattabiraman author of freefincal.comM. Pattabiraman is the co-author of two books: You can be rich too with goal based investing and Gamechanger. “Pattu” as he is popularly known, publishes unbiased, promotion-free research, analysis and holistic money management advice. Freefincal serves more than one million readers a year with numbers based analysis on topical issues and has more than a 100 free calculators on different aspects of insurance and investment analysis, including a robo advisory template for use by beginners. Contact information: freefincal {at} Gmail {dot} com He conducts free money management sessions for corporates (see details below). Previous engagements include World Bank, RBI, BHEL, Asian Paints.

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10 Comments

  1. People know this deep down their heart… but they always ignore it (instant gratification)…..
    You gave this proof, strong enough to sit and think ….
    Thank you Pattu …..

  2. No matter, how hard the sensible thing is said but the emotional part of our brain ‘ll over financial part or should I say rational part. Common sense suggests, we do not need a car for parking it most of the time in our own house, yet We go for it.

    Thanks

    Ashal

  3. IMHO a car purchase should never looked with an investment perspective. Just like we don’t treat insurance as investment we should also not treat motoring as an investment choice. It’s a consumable and the loan just increases the overall cost of it. For some the benefits of this choice are worth the cost.

    Also a note of caution on used cars : buying used cars and saving on the depreciation brings with it its own can of worms. Used cars carry the risk of tampered odometers , and other service related problems.

  4. Hey! I have read your Blog this So Nice and Awesome service you have provided, I learn many new things from here and want to implement my website. If you are also Know for something New related to this then visit my website.

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