I, M26, am planning to get a new car (~15L) for my family of myself and my mother. I have ample savings and emergency fund and can easily pay cash down and get this car. I have never taken any EMIs/loans whatsoever. This will be our first new car and a big step up from a 10 year old 2nd hand Swift.
Now there are 2 options:
I am leaning towards the first because no debt!! and also eventually +2.5L cash flow. Have not factored in inflation and all, but this is a rough calculation. Have I miscalculated something? Please let me know!
What would you do in this situation?
Now there are 2 options:
- Pay full cash - get the car. This enables me to invest the otherwise EMI of 23k p.m. in an SIP @ 9% and probably have around 17.5L at the end of 5 years. Net cash flow = (17.5L - 15L = +2.5L). Also, debt free, lesser paperwork.
- Pay 3.5L DP, get 11.5L car loan ---> The 11.5L that I did not pay from my pocket can be invested @ 9% to get ~17.5L at the end of 5 years. But I would have paid ~14L as EMIs over 5 years + 3.5L DP. So, Net cash flow = (17.5L - 17.5L = 0)
I am leaning towards the first because no debt!! and also eventually +2.5L cash flow. Have not factored in inflation and all, but this is a rough calculation. Have I miscalculated something? Please let me know!
What would you do in this situation?