Quote:
Originally Posted by JustStarted  Hi,
i am total newbie to car and car loans. HDFC has quoted me EMI 6885 @14.5% for 36 months for sum of 2 Lac.
means total i pay around 2.48 Lac in 3 year.
now if i put this amount in Fixed Deposit at 10%
after 3 yrs i get around 2.68 Lac.
means its profitable to take loan.
but in this case where butter and bread for banks ? i know i am missing something here.
can someone please point it out ?
Thanks |
the answer to your question is that
1. Loans are usually with reduicing balance. when you pay the 1st emi, a certain portion of your prinicipal loan amount is reduced. so as you pay, the principal decreases, so does the interest.
2. in FD, there is complete reversal. as time increases the interest gets cumulatively added to the prinicipal.
i hope i have explained your query
