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Old 14th April 2010, 21:18   #61
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Originally Posted by neoonwheels View Post
You have to earn more than 12% to make it profitable.
Much more than 12%, considering inflation and taxes on profit.
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Old 14th April 2010, 21:48   #62
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Originally Posted by jigbarai View Post
If you think of accumulating 55 L and then buying that flat - looking at a loan tenure of 10 to 15 years (assuming you take that much time to save that amount), how much do you think that very same flat will cost you, 15 years from now ? It would be twice or thrice of its current value.
IIRC, he only said half, which means around 25L. It makes a world of difference borrowing 30L & 46L for a 15 year term; I'm under the impression that, for 7-8 years on a 15 year tenure, you keep paying only the interest & peanuts of principle.
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Old 14th April 2010, 22:08   #63
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What a thread, never knew this existed.

Most of us are living on the edge, true. Time to get a bit serious.

Even myself who does not spend money lavishly, still try to squeeze in a good sum as savings. Simple technique.

Open a savings account in a nationalised bank, NO Chequebook, NO Debit Card = No withdrawal at all, only deposits. I honestly save up money every month upto 3 yrs. End of 3 yrs spend the money buying a classic/ vintage car, and spend the remaining 2 yrs restoring it.

I have done this twice in the last 8 yrs, i know i have acquired the best of classic cars anyone can own. Over 8 yrs i have spent close to 8 lacs and still spending bits and pieces of money month on month.

That apart, maintenance of other cars, and misc., spendings, also put hard cash on house construction.

Savings are happening, but i am now imagining, what would my Bank account would have been and the interest i would have earned, if i had not spent all that hard earned and saved money.

Something that is beyond calculations, i cant judge weather i was right or wrong.

Last edited by PAVAN KADAM : 14th April 2010 at 22:10.
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Old 14th April 2010, 22:17   #64
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My best investment was to sell my old car and not buy a new hatch as I was planning to do at first. Considering the monthly EMI, fuel/maintenance bills and driver's wages (nobody else in the family drives, so I'd have had to hire a driver) I'm saving a cool Rs 15,000 a month. Nearly 2 lakh a year! That's about one-fifth of my annual salary, so it's not a bad bargain at all.
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Old 14th April 2010, 22:38   #65
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A health problem in the family can throw all your careful planning to wind. With my son's autism, now I have to maintain a second home in Bangalore and travel up and down regularly from Manipal. The expenses are just scary, I don't even want to think about it.
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Old 14th April 2010, 23:55   #66
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Quote:
Originally Posted by neoonwheels View Post
1. You did not mention the tenure of the loan. If its 60 months then you have already paid around 80% of your interest. You have to pay fine on outstanding amount (3-5%).
Yes the tenure is 60 months of which 30 months remain.
I am not aware of how this works, but since I am closing the loan early, wouldn't the interest have to be recalculated for the reduced loan period? I understand the foreclosure fee of 3-5% part.
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Old 15th April 2010, 08:14   #67
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Quote:
Originally Posted by Samurai View Post
A health problem in the family can throw all your careful planning to wind.
+1. My mom had to undergo a critical operation 2 years back. Sametime we had a baby. Since the illness was not covered under mediclaim and I didnt want my dad to spend any of his retirement money. I took up the whole tab. It left me and my wife totally drained of all our savings and we quitely thought of selling both the Classic and Bolero. Eventually some proper movement of funds across various savings done over a period avoided any drastic steps.

It was a lesson learned and a lesson learned well. We save like our life depends on it now. And if I look at it closely it actually does.
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Old 15th April 2010, 10:24   #68
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Quote:
Originally Posted by Jaguar View Post
Yes the tenure is 60 months of which 30 months remain.
I am not aware of how this works, but since I am closing the loan early, wouldn't the interest have to be recalculated for the reduced loan period? I understand the foreclosure fee of 3-5% part.

As per my understanding, there would be a forclosure fee on the balance principle, they would not take any intrest for the remaining amount. However, since incase of any loan the first couple of months you would only pay interest, then along with the interest you would pay a very little amout towards your principle. You would actually be shocked when you would go to the bank to know the forclosure amount. Best idea would be, keep on Paying EMIs and invest this money in hand else where where your returns will compensate your loss interms of interest paid for your car loan.


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Old 15th April 2010, 10:27   #69
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Quote:
Originally Posted by Jaguar View Post
Yes the tenure is 60 months of which 30 months remain.
I am not aware of how this works, but since I am closing the loan early, wouldn't the interest have to be recalculated for the reduced loan period? I understand the foreclosure fee of 3-5% part.
Car loans are fixed interest loans. On 60 months span, they adjust the EMI such a way that you pay interest first and then loan. In my loan tenure, I paid almost all interest (90-85%) at the end of 3rd year. Now the fine is on: either on principle or the remaining interest, whichever is higher I guess. This fine is 3-5% depending on back. So you end up paying interest again on the principle which is higher as you were paying interest till this time. This is the reason we see banks posting profits in hundreds of crores
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Old 15th April 2010, 10:53   #70
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Quote:
Originally Posted by pramodkumar View Post
As per my understanding, there would be a forclosure fee on the balance principle, they would not take any intrest for the remaining amount. However, since incase of any loan the first couple of months you would only pay interest, then along with the interest you would pay a very little amout towards your principle. You would actually be shocked when you would go to the bank to know the forclosure amount. Best idea would be, keep on Paying EMIs and invest this money in hand else where where your returns will compensate your loss interms of interest paid for your car loan.
You mean pre-closure? Foreclosure is when the bank takes over the property over non-payment of EMI.
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Old 15th April 2010, 11:10   #71
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Whew, another thread to learn apart from cars..

Everyone has some funda, so do I have.

I too have diversified my funding in PPF, Equity Market, Mutual Funds, Gold and Real Estate. However, I am keenly trying to increase my funding in Real Estate by any means as it seems to be the safest and best bet to me keeping future in mind.

I always try to invest money in a term where-in it can be liquidated within a short span without any issue. Keeping the Money in Bank will help in multiplying at a pace which we are targeting anyhow. Money should revolve around to various places.

Quote:
Originally Posted by Jaguar View Post
We are discussing money and let me put a real-world question here.
I have a car loan and the principal outstanding is 1.6+lakh. 30 EMIs of Rs. 6670 pending. Rate of interest: 12%
Now, I have the money with me to foreclose this loan today and be debt free.
What is the most sensible thing should I do, close the loan now or invest the amount somewhere to try and make more than what I would pay as EMI?
Let's do some calculations.

If you continue your EMIs, Intrest fetched from your pocket.
6670 * 30 = 200010 - 160000 = 40100

If somehow you decide to quit right now, Penlty to be fetched from you pocket. (Assuming you'll ending up paying at max 5% as penalty)
160000 + (160000 * 5%) = 168000 - 160000 = 8000

Now, According to you EMI I can judge you picked up a loan of 3 Lakh for the tenure of 5 years where in you have already paid a intrest of around 70-60 % of the total intrest.

My suggestion : If you are in hurry and would like to get off the debt right now, then only thank about getting out of it as you have already paid a major amount of interest for the loan you picked up for 5 years. Still, if you want to exit the debt you ain't will be in loss as you'll otherwise also end up saving around 32000 net. Take your call.
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Old 15th April 2010, 11:50   #72
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I have a loan at 11.75%, 58 installments are remaining. Most of the months I have the money to pay 2X EMI ( or even 3X sometimes). Should I pay the 2X/3X EMI as and when possible? or Should I pay the regular 1X EMI and invest the rest in some stocks/MF? what makes more sense?

I am 22 now and I already feel like I dont save enough :P
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Old 15th April 2010, 12:08   #73
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^^ Depends. If you have a home loan which is fetching you tax benefits then why would one pay 2-3 times the EMI. Any ways the banks are smart enough to adjust the amount in such a way that their share of interest (earnings) are not hampered.

You need to check up with your vehicle finance company if paying extra amount is going to bring down the tenure or the principal amount and by how much ?

That brings me to another question regarding home loan.
If I have 7 L balance on my home loan (according to the provisional certificate)
and I pay 3 L straight at a time, will the amount be reduced to 4 L or interest will be computed accordingly and it will still remain around 5-6 L balance ?
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Old 15th April 2010, 13:06   #74
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Anyone knows whether Home loans in India are full-recourse or not?

Quote:
Originally Posted by Samurai View Post
A health problem in the family can throw all your careful planning to wind.
Private health insurance can mitigate that to some extent.

That's the whole debate about health insurance reform going on in the US. Its closely tied down to your job. So if you lose your job, you lose insurance.. and then god alone can help if you fall sick.

Don't know when we will have a similar social safety net in India like they have in UK or any of the European countries.

Quote:
Originally Posted by Jaguar View Post
wouldn't the interest have to be recalculated for the reduced loan period?
Oh you wish !! Interest that is already paid to the Bank will never come back . Banks will just ask you for more money, in terms of pre-payment fees of 2-3% of remaining principle.
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Old 15th April 2010, 13:12   #75
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Quote:
Originally Posted by prince_pervez View Post
That brings me to another question regarding home loan.
If I have 7 L balance on my home loan (according to the provisional certificate)
and I pay 3 L straight at a time, will the amount be reduced to 4 L or interest will be computed accordingly and it will still remain around 5-6 L balance ?
After you pay the 3L(Principal) which will carry a penalty of less than 2%
the remaining EMI's will have interest calculated for only 4L.

But IMO closing a home loan early is not advisable, as the effective interest rate is much lesser.

Last edited by Daewood : 15th April 2010 at 13:15.
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