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Old 29th April 2010, 14:02   #151
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“Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like.” --Will Smith
Straight out of my sig.
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Old 29th April 2010, 14:13   #152
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GTO was one of the lucky ones he got a good car. There are folks on TBhp who have bought used Balenos, VRs etc who tell a different story. When buying second hand, manfacturer warranty, etc goes out of the window and there is a probability of spending $$$ and getting a lemon.

P.S. I am not against used cars, but folks here are making it sound like second hand car is the wiser option, which I dont neccesarily agree with. Second hand becomes a good option when your DEZIRE exceeds your pocket and you want to own a good higher segment car at a lower price.
To give you an example, I would never consider buying a second hand Santro etc. As I can easily afford a new one. But if I am stretching my budget to buy a Civic, I might be tempted to look at the pre-owned car segment to try and "fit" it in my budget.
I would like agree on the point, It depends upon person-to-person.

Earlier it was a preception that used car is bought by only those who cannot afford a new one. Why ?? Largely, Due to our own ego and fear !! What would our relatives say, what would our neighbors say, what would my friends say !! Chuck them, it's your money then why not use it wisely.

If one has a budget of 10 Lakhs and he is streching another 2 Lakhs for picking up your dream civic, then in this case I would suggest him to scout hard and try to pickup a pre-owned civic for 10 Lakh. He'll get a 8-9 month old model with a valid warranty, less kms on ODO, still that new car smell. I'll be not surprised if he may land up current year's model as well. What you saved.... a whopping 2 Lakh, What you lost... those ODOs and a few months of ownership
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Old 29th April 2010, 21:39   #153
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1) Never buy a car on loan unless you get depreciation benefits from tax
I would opt for the loan if the rate of interest is lesser than the investment returns made elsewhere.

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IMO, start saving money & assume that is EMI & then buy the car later instead of buying the car now & paying the EMI later.
Too conservative, I would say. If I were to start saving for entire cost of the car and then buy the car at the end of my saving, it will take years. But I need the car now. By the time, I have saved enough, my need might have changed (bigger family, lifestyle changes etc). So, start saving again? When will I own that car?

Does it make sense to keep working, saving and by the time one has enough to buy and enjoy the car, health/family needs (kid's education,marriage etc) force you to abandon it?
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Old 30th April 2010, 02:50   #154
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Well i bought me a second hand car and am happy with it. In my humble opinion, your first car should always be a non-expensive 2nd hand car. I say this because, i started driving only after I bought a car! As the years have gone by, now I can look around for a newer one. But after reading GTO's thread about lateral upgrades, I am having 2nd thoughts! So all the Bangalore BHPian beware: I will be troubling you to tag along with me in choosing!
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Old 30th April 2010, 03:59   #155
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I would opt for the loan if the rate of interest is lesser than the investment returns made elsewhere.
Raj, this man not be possible; just let me know if you come across one; becasuse the bankers should survive right? They cannot lend out money for less than what they pay.

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Too conservative, I would say. If I were to start saving for entire cost of the car and then buy the car at the end of my saving, it will take years. But I need the car now. By the time, I have saved enough, my need might have changed (bigger family, lifestyle changes etc). So, start saving again? When will I own that car?
Well, I agree with you on this; so if it were like this, then, for eg, like 50% on downpayment & 50% on EMI could be worked out. But IMHO, forsee & start early to avoid disappointments.

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Does it make sense to keep working, saving and by the time one has enough to buy and enjoy the car, health/family needs (kid's education,marriage etc) force you to abandon it?
No it doesn't; but a proper planning can help

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Well i bought me a second hand car and am happy with it. In my humble opinion, your first car should always be a non-expensive 2nd hand car.
Very true; can I make it slightly - highly affordable?
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Old 30th April 2010, 07:52   #156
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Raj, this man not be possible; just let me know if you come across one;
When I bought my car in 2005, interest rate for my loan was 5%. And my FD instruments were giving returns in range of ~6%. Not to mention MFs and equities.

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becasuse the bankers should survive right? They cannot lend out money for less than what they pay.
Manufacturer's subvention did the trick for me. ICICI was going ballistic in selling loans for Hyundai cars. I just capitalized on the selling spree. I had the entire cash, but still opted for the loan.

I think you are assuming too much based on the current economic scenario. Right now loan market is a seller's one. That will not be the case always.
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Old 30th April 2010, 08:01   #157
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I think you are assuming too much based on the current economic scenario. Right now loan market is a seller's one. That will not be the case always.
You're right, I'm talking on present scenario; yes, probably in 2004-2005, this could've been the case. But I'll keep a watchout for this scenario to happen once again ; but again 5% for the entire tenure period or for first 12 months something like that?
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Old 30th April 2010, 08:20   #158
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but again 5% for the entire tenure period or for first 12 months something like that?
5% for entire tenure of 36 months. Manufacturer will have tie up with one particular bank. One should go for that particular bank. All these are applicable for new cars. Not sure of used car loan scenario.

What I am essentially saying is that one size do not fit all. It is horses for courses. One should opt for the best option at that point in time. My current property loan is 8% for first year, 8.5% for 2nd, 3rd years. Hence my car plans are shelved until I repay maximum amount of principal back within these 3 years. It is more about affordability, than anything else. At the moment, I cannot afford a car due to other liabilities. Once my liabilities are under control, I will opt for another car. Taking loan, of course. Otherwise, how will I own that Fortune ....er?
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Old 30th April 2010, 08:54   #159
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Taking loan, of course. Otherwise, how will I own that Fortune ....er?
Right, but for a person like me, who believe that loans should be paid off, gives sleepless night until the loans are over ; no matter the loan is big or small & that's why I opt to save first & then buy - prefer the traditional Indian way.

But if you ask me about loan for business, I would immediately say yes. Its like I buy the car for generating income. I can risk for taking even a 85% on loan; because, the harder I work, more quickly I can complete the loan. Hope you got the point.

Last edited by aargee : 30th April 2010 at 08:57.
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Old 30th April 2010, 11:27   #160
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I think some views in this thread are far too conservative. There has to be a fine balance about saving for the future and living today. Car is a depreciating asset, but one that gives you satisfaction, comfort, dectates your standard of living, and holds an important part in your memories.

We all can save money and buy a "pua" (quarter) for 90 rs, but we do go out to resturants every now and than to indulge. You can buy a bottle of good colombian wine for 900 rs, but you are quite prepared to pop the cork at a fancy pub for 3000. I mean everything from clothes, to toothpaste, mobiles, shoes are expenditure. But they also constitute to timely happiness, standard of living and good times. So one cant be too conservative and plan life.

Same can be applied to car loans. If you dont advocate taking a loan, and since its a depreciating asset. Why than even consider buying a car outright or a second hand car? Why not just simply take a ride in a bus??? Because car gives you freedom, safety, comfort, standard of living, and all that has an assocaited cost. For those who can afford more, this cost is higher, and from those who can afford less and have less risk taking appetite, this cost is lower.

The fear of taking loan from conservative standpoint is what if you loose your job? Well during last 100 years we had very few reccessions and only one great depression that happened in 1929. And if that situation was to come again, than even the most conservatives will be in doldroms. But than again just like you dont stop crossing the street in fear of a car hitting you, similarly you cant stop living life (which includes taking reasonable loans) in fear of dooms day outcome. Because you run another risk my friend, you keep planning for tomorrow and suddenly while crossing a road a lawry comes and GAME OVER! There goes your dream car, your dream house, and whatever you earnt is something that you never got to use. I am not saying that one should not save for kids, excergencies etc. But than again there has to be a fine balance between planning for your present and your future.

Additionaly, one can always sell the car in case he looses his job and close his EMI's provided he has made a reasonable downpayment. Its not like a 2 year old car bought for 4.5 lakhs sells for 2 lakhs, it sell for 3-3.5 lakhs so in case of emergencies one can always sell the car.

Secondaly those advocating second hand cars, are not aware of how much shady our second hand market is. Incomplete papers, false odo, etc are few of the very common malpractices in this domain. For guys like GTO its relatively easy, as they are so respected in automotive world and have so many bhpian friends. But for an average Joe the Shmuck, there is more element of risk that he is exposed to when buying a second hand car. Its a long and painstaking excersize.

And why buy a second hand car in first place? Those who say it saves depreciation, well yeah surely it does. But there are other cons, it mostly makes sense to buy the second hand car outright, as the used car loans are very high as compared to new cars. Additionaly, cars like Skoda go out of the window and your choice is limited to Japs or Koreans given the fact that its a risky proposition to buy a Skoda without warranty.

Many wont buy a second hand Nano, as one can buy one outright. Its only when one wants to buy a Corolla on a Dezire budget that second hand market becomes an interesting proposition.

Lastly those who want to close loans ASAP, it might not be the most practical thing to do. As the value of money decreases with time. For a person with 6k emi for 20 year home loan, if he pays 12k he can close it off in 5 years forgoing his present desires. But can u imagine the value of 6k 15 years from now? It wont hold its value. But the 12 k he has to part with now, would substancially effect his present life.

To summarize, there is a fine balance between living it up, and saving it up. You cant totally live your life thinking about tomorrow, because today was tommorow, if you were thinking about it yesterday...

Last edited by aseem : 30th April 2010 at 11:44.
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Old 30th April 2010, 12:26   #161
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Aseem,

Very well said!

I will never even comment on a person who cannot afford a car or has too many responsibilities,which take priority. However, I have seen far too many people riding bikes for years when they don' t need to. Quite a few people believe that car is a 'waste of money'. Why buy it when you can ride a bike that gets the job done.

Well, it sure is a waste of money! But it also is a great convenience. You only get one life...live it!!!

There are three kinds of people that I have met here:

1) Can't afford/Other priorities/Other responsibilities--> Well, they have my utmost respect. You can't live in 'consumerism centric' world and go bust up.

2) Can afford but go overboard--> These are the dangerous type. They have aspirations but do not have resources (presently) that match up to those aspirations. They go overboard and try to buy over and above their pocket. Sheer stupidity! Buy the BEST that you can AFFORD.

3) Can afford but are too afraid/conservative/kanjoos--> The last word is harsh. I deliberately chose this word. These is a thin line between being 'prudent' and being 'miser'. Most of the people who are 'miser' think they are 'prudent'!! Most of the kinds that I have met here 'tell' other people (themselves even more) that a bus/bike suffices for their needs when it doesn't.

I try to live life to FULLEST in the RESOURCES I have. ('Save' but also go out there and live life!)

Disclaimer: I have nothing against people who fall in the third category. Its people like 2nd category (how not to go overboard and put yourself under pressure when it is not required) and 3rd category (how not to go overboard with savings and curtail most of your desires/needs) who teach me how to live a balanced life.
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Old 30th April 2010, 14:14   #162
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Originally Posted by aseem View Post
GTO was one of the lucky ones he got a good car. There are folks on TBhp who have bought used Balenos, VRs etc who tell a different story. When buying second hand, manfacturer warranty, etc goes out of the window and there is a probability of spending $$$ and getting a lemon.
To give you an example, I would never consider buying a second hand Santro etc. As I can easily afford a new one. But if I am stretching my budget to buy a Civic, I might be tempted to look at the pre-owned car segment to try and "fit" it in my budget.
Thats exactly the point. You really have to know the knitty gritty details of what you are looking at before you decide, when you are going for second hand cars. If you can afford a first hand car then its good but not everybody can do it and here comes the second hand car. Plus if you are selling your second hand car for a new one you have a choice of "Lateral upgrading". For example a guy selling his Getz and buying a second hand Verna. Ofcourse its not everybody's cup of tea.
Cheers.
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Old 30th April 2010, 14:29   #163
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If buying used car, I will buy only from a close relative/friend/associate i.e. only a car that is well known and verifiable. Else, I will go to the most reputed used car dealer in town and not mind the premium.
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Old 30th April 2010, 14:32   #164
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If buying used car, I will buy only from a close relative/friend/associate i.e. only a car that is well known and verifiable. Else, I will go to the most reputed used car dealer in town and not mind the premium.
If I am selling my car, I'll never sell it to close relative/friend/associate. I do not want someone disturbing me often for some minor issues!!
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Old 30th April 2010, 14:38   #165
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Lastly those who want to close loans ASAP, it might not be the most practical thing to do. As the value of money decreases with time. For a person with 6k emi for 20 year home loan, if he pays 12k he can close it off in 5 years forgoing his present desires. But can u imagine the value of 6k 15 years from now? It wont hold its value. But the 12 k he has to part with now, would substancially effect his present life.
This is a very valid point. Most people (including the so called experts) do not take this depreciation factor into account while advising against taking loan or advising to pre-close a loan.

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To summarize, there is a fine balance between living it up, and saving it up. You cant totally live your life thinking about tomorrow, because today was tommorow, if you were thinking about it yesterday...
There is no point in living like a poor man only to die like a rich man.

Rohan
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