Think Before Taking a Car Loan!

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!

Want to conduct a sales-free "basics of money management" session in your office?
I conduct free seminars to employees or societies. Only the very basics and getting-started steps are discussed (no scary math):For example: How to define financial goals, how to save tax with a clear goal in mind; How to use a credit card for maximum benefit; When to buy a house; How to start investing; how to invest for and after retirement etc. depending on the audience. If you are interested, you can contact me: freefincal [at] Gmail [dot] com. You need to only cover my travel fare for the session.

Connect with us on social media


Do check out my books


You Can Be Rich Too with Goal-Based InvestingYou can be rich 243x300 - Think Before Taking a Car Loan!

My first book is now available at a 35% discount for Rs. 258. It comes with nine online calculators. Get it now.  The Kindle edition is only Rs. 199.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Cover pink - Think Before Taking a Car Loan! My second book is now only Rs 199 (Kindle Rs. 99) Get it or gift it to a young earner

The ultimate guide to travel by Pranav Surya

Travel-Training-Kit-Cover This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step.  Get the pdf for ₹199 (instant download)

Create a "from start to finish" financial plan with this free robo advisory software template


Free Apps for your Android Phone

All calculators from our book, “You can be Rich Too” are now available on Google Play!
Install Financial Freedom App! (Google Play Store)
Install Freefincal Retirement Planner App! (Google Play Store)
Find out if you have enough to say "FU" to your employer (Google Play Store)

About Freefincal

Freefincal has open-source, comprehensive Excel spreadsheets, tools, analysis and unbiased, conflict of interest-free commentary on different aspects of personal finance and investing. If you find the content useful, please consider supporting us by (1) sharing our articles and (2) disabling ad-blockers for our site if you are using one. We do not accept sponsored posts, links or guest posts request from content writers and agencies.

Blog Comment Policy

Your thoughts are vital to the health of this blog and are the driving force behind the analysis and calculators that you see here. We welcome criticism and differing opinions. I will do my very best to respond to all comments asap. Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

9 thoughts on “Think Before Taking a Car Loan!

  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.

Your feedback is valuable. Do let us know what you think about the article and help us improve