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Old 1st April 2016, 14:47   #61
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Smile Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by GTO View Post

If you have to think twice about whether you can afford it or not...in most cases, you can't.
This one line of GTO says everything. Interestingly, my case has a striking similarity with yours. I have similar amount of liquid cash with me. Rest of the investments and financial/social positions are similar except a land and type of Job. When I was in Japan, I determined to take Altis. But when I came back, I recalculated my finance and went for 50% rule. I zeroed on City-VMT-1.5 finally. Again going back to GTO's quote, I never thought if I could afford a City. So I went for it. The same was not true for Altis, so didn't take the risk.

Now the twist: Even if I have liquid cash, I am taking SBI loan for 70% of on-road price. I will repay it within 2 years as there is no prepayment penalty. Let it be hypothecated to bank during its initial years and I pay some interest for it. EMI will keep a check on my bad spending too.
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Old 1st April 2016, 14:48   #62
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by DMD View Post
Dear GTO,

MY NEED: a better fun-to-drive(power, features, handling etc) car than the Ritz. I would be using the car mostly for home-office commute in Bangalore and mandatory long trips (800km) once in every two months which covers the ghat section as well.

Regards,
DMD
Ecosport prices have dropped substanitially. If you are okay with a Petrol vehicle, you can check out Eco-Boost 1.0


I see that you have mentioned 70K savings at onsite and 60K at offshore. Since you are in Bangalore, you can get better pay at offshore than 70K savings at onsite. And if you are happy about staying abroad, then better to shift there for good and buy bigger and better cars available there.

Last edited by recshenoy : 1st April 2016 at 14:50.
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Old 1st April 2016, 15:01   #63
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by GTO View Post
I like to simplify. To me, the key sentence in your post is:



Any family man with a wife & kid making 60k / month shouldn't be looking at a Safari Storme or S-Cross 1.6.

My golden rule is that your car should cost you 10% or less of your income. Now, since you have other savings & investments, we can increase that number by a little, but no way would I recommend a car costing 15 lakhs to you. It'll be too much of a drain and will affect your lifestyle (e.g. holidays). Heck, on an expensive car, your insurance renewal alone will cost you half a month's salary.

My suggestion:

- You drive a Ritz right now. No need to make such a big jump. When I used to drive a 7 lakh used City Vtec, trust me, I was smiling as much as in my 530d right now. Heck, I'm the happiest when I'm driving my 20 year old Jeep which is worth zilch on paper. My point? You can have fun in cheaper cars too. If I were in your position, I'd probably buy a fast hatchback from the B2 segment and have a lot of fun with it. You are only 32; there's a lot of time in your life to upgrade as you move up the career path.

- What I would really do in your position is buy a pre-worshipped car. They offer unbeatable value. A used Civic with mild modifications will:
- Be a LOT of fun to drive
- Cost less than a new B2 hatchback
- You could get one in warranty too. Honda now offers extended warranties up to 7 years, even if you buy used. In effect, your risk is zero
- Be a big step up from your Ritz

I'm using the Civic as an example, the choices are plenty (including used Polo 1.6 GT TDIs, Corolla Altis etc.). Wait another year or two and you'll get an S-Cross 1.6 or Abarth Punto at half the price of new .

Because you have such savings, you can either buy one outright, or take a loan against a 17.50 lakh FD (at 1% more).

3 years into my career, I wanted to buy a pre-worshipped W220 S-Class. Went and checked one out, really liked it. Was a clean car and I could easily afford the EMIs as my business was off to a strong start. Mom told me 'Buy an S-Class when the cost of owning it makes absolutely no difference to you'. In other words, when you have a L-O-T of liquid, don't even need to think about the EMIs hitting your account every month, the maintenance etc. What she said made a permanent impression on my head. If I own or spend anything today, it's on stuff that I don't need to stretch funds for. I've never lost sleep on any expense - kept them all in control.

If you have to think twice about whether you can afford it or not...in most cases, you can't.
By far the sanest advice. It feels good to say things like "follow your dreams", "You only live once" etc. etc. But half the people saying that on the forum would not practice the same advice even if they are in a situation like yours.

The fact is, you are in a comfortable financial position today. But what about tomorrow? Don't take your job for granted. Don't take your investments for granted either unless they are growing more than the inflation rate.

Answer the following questions in your mind,
1. Tomorrow god forbid if I have to leave my job, do I have sufficient savings to take me and my family through till the time I land another job?
[I would say keep at least 1 year worth of your current salary for this situation. Being in IT myself, I can assure you that the days of job stability are going away]

2. After paying cash down on the dream car, do I still have enough money to maintain the same life style i.e. going on vacations, indulging in restaurants, shopping liberally etc.
[If you think you will be cutting down on few things, then its not worth it]

The good part is, you dont have any other loans. So at this point if you had a cash balance of around 10L more, I would have advised you to buy the SCross by cash down payment, but now, I can only say that you either buy something around the 10L figure or take a part loan for the SCross while still keeping around 10L in your investments.

But in the end, do as your heart tells you to
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Old 1st April 2016, 15:02   #64
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DMD, wanted to check if you have considered the below scenarios;
Once you come back from on-site how long will you be in India before the next on-site trip?

Scenario 1-If you are not in India for long term then do you want to buy a premium car for a short term (less than 2 years)? You will take a lot of depreciation if you buy new (but you can again save well once you reach on-site which can offset the depreciation hit).

Scenario 2- if you are in India for longer duration blowing all the money on a car will not be a good option financially as S-Cross its not a car ideally suited for your Indian salary. I personally will not buy a S Cross if I were in your shoes.

Just my 2 cents.
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Old 1st April 2016, 15:10   #65
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by GTO View Post

Because you have such savings, you can either buy one outright, or take a loan against a 17.50 lakh FD (at 1% more).

3 years into my career, I wanted to buy a pre-worshipped W220 S-Class. Went and checked one out, really liked it. Was a clean car and I could easily afford the EMIs as my business was off to a strong start. Mom told me 'Buy an S-Class when the cost of owning it makes absolutely no difference to you'. In other words, when you have a L-O-T of liquid, don't even need to think about the EMIs hitting your account every month, the maintenance etc. What she said made a permanent impression on my head. If I own or spend anything today, it's on stuff that I don't need to stretch funds for. I've never lost sleep on any expense - kept them all in control.

If you have to think twice about whether you can afford it or not...in most cases, you can't.

Dost, tumne meri aankhein khol di!
As in you've given me a wonderful idea which I was not at all thinking about, details about which I will pen down later in my ownership thread. Thanks to you and double thanks, regards and respect to your mother.
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Old 1st April 2016, 15:18   #66
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

I dont recommend buying s-cross (or something like that). Here is my advice.
1. Work towards achieving financial freedom as early as possible. ( preferably by 40).
2. You can take loan. But your debt/equity ratio should be as low as possible.
3. With due respect, I dont agree with GTO on used car purchase. No matter how well maintained it is:-). Because you dont get that new car feel, new car smell etc.
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Old 1st April 2016, 15:23   #67
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by DMD View Post
I love driving and and has been longing to own a really good car since a long long time. I joined this forum with the intention of buying a Tata Safari Storme and I have been keeping a close eye on various discussions about it. But I think I have fixed what car I am going to buy considering all pros and cons. And it shall be a Maruti Suzuki S Cross 1.6 Alpha
You have lived up to what a Son, Husband, Father hold responsibilities for. Time to live your dream. But I would advice, go for a car loan, keeping cash in your hand. See how it goes for 2 years and then if you want go ahead a pre-close the loan. Scross 1.6 is a gem of a engine
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Old 1st April 2016, 15:37   #68
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

I would like to add a few points from my own experience and scenario.

I earn a little more than you, but have two kids to compensate that !
Upgraded to a modern home 3 years back, spent a lot of money (and I mean a LOT i.e. beyond what I should have) on the interiors, and I now sit on a Home loan EMI of 15k and an interest free EMI of 10k.

When I look back, I spent my liquid in-hand cash + an interest free loan on the interiors. My wife stopped working a little time before we bought the new house.

Now, I pay 25k in EMI's and additionally have the school fees at hand (Just got the admission confirmed for my younger one). Any decent school will cost you roughly 60k minimum a year per child. Since I send two kids now, it comes to 10-12k a month average (for which I plan to start a recurring, else it gets unmanageable).

No, I do not regret splurging on interiors, for this was for my parents to live in a completely done up place which they could not till then and I wanted them to enjoy it.

Point is, you are making good money right now and may feel very comfortable spending it, just like I thought I can, but the fact is, these <100k/month Indian salary's aren't quite a comfortable figure to be in when you have a family and you are the sole earning member.

Trust me, you do not want to be in similar scenario.

My car is long overdue for a change, but I do not, since I cannot afford it. At most I can buy an Alto/WagonR but then my current ride is far better than those cars, albeit due to its age, I do not use it for longer drives.

My suggestion to you is, invest what you have managed to save. You already have a nice car in the form of Ritz, which is also fun to drive around (please do not compare it with the tsi and abarth). Whenever you are going for long drives/outstation and feel the need for a better car, by all means rent out a luxury car and enjoy it with limited liability. I am sure with cash in hand, you can easily afford to rent it.

Last edited by vinit.merchant : 1st April 2016 at 15:54.
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Old 1st April 2016, 16:05   #69
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

I was in a similar dilemma when I recently purchased my XUV500. I went ahead with the "all cash" option. Since I am not much of an investor, I rely on bank FD, and could not justify the 4%- 5% gap between loan interest and returns from FD (you do have to pay tax on interest income from FD).

I am (with God's grace), loan and emi-free, and if stuff happens, I do not have to bother with the collection agents etc. Which gives me a better handle to deal with that "stuff".

Cheers,
Ajay
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Old 1st April 2016, 18:15   #70
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

My thoughts:

Have you ever heard of story - running after pot of gold.

Money is never enough hence a day will come when you will have 50L but still feel why shell out.

Moreover age is always against us, what is the point of buying something really cool when we are too old.

You are 32 now - buy something that you enjoy but not at the cost of all savings.
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Old 1st April 2016, 19:00   #71
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by DMD View Post


1. Aren't pre used cars heavy to maintain?
Nope, not if you buy the right car. Team-BHP is full of articles on guiding you to buy pre-owned. Please search.

Patience and inspection is the key.


Quote:

3. If I were to buy a used Honda/Toyota, what car would you recommend given my financial status (which would be better in 2 years)
If you're buying today, you could look at a Civic/Corolla

Quote:

4. If I were to buy a NEW hatchback, what would be the best choice?
Baleno 1.0 turbo petrol when it launches. The baleno is a good handler for it's size.
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Old 1st April 2016, 20:12   #72
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by GTO View Post
I like to simplify. To me, the key sentence in your post is:

Any family man with a wife & kid making 60k / month shouldn't be looking at a Safari Storme or S-Cross 1.6.

My golden rule is that your car should cost you 10% or less of your income. Now, since you have other savings & investments, we can increase that number by a little, but no way would I recommend a car costing 15 lakhs to you. It'll be too much of a drain and will affect your lifestyle (e.g. holidays). Heck, on an expensive car, your insurance renewal alone will cost you half a month's salary.
to this.

We as a family also had the same dilemma in 2008, that time we had a budget of 18 lakhs. Me being a petrol head suggested Skoda Laura, we went for the test drive and we all quite liked it.

It was then, while going through various review online, I stumbled up on Team-bhp and was blown away with detailed reviews of cars.

It was my mom who wanted to keep the purchase modest pursued everyone in the family to go for a cheaper car and we ended up with Honda City. The horror stories, far away ASS also played a role in not choosing the Skoda.

We ended up buying the car on loan for tax benefits and invested the 18 lakhs in portfolio. It was a roller coaster ride for that investment in the past 8 years, luckily it never went below what we have invested till now and currently we could buy Mercedes S400 with that money.

Buying a car is more than the initial investment, there is maintenance, insurance, fuel cost etc that we have to account for all of these. Having said all these, I think we currently can look for a car within 20 lakhs budget and maintain it without thinking too much about money.

These are all just advices, at the end of the day its your money and you can spend they way you wish but you should also need to account for the risks you take. It shouldn't be a spontaneous purchase given that you are spending this much amount.
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Old 1st April 2016, 20:16   #73
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by The Rationalist View Post
Hi DMD,
Why don't you check out Polo TSI or Figo AT, both are fun to drive and comes with an automatic shifter, that would be boon in the maddening Bangalore traffic. Or Figo TDCI if you want a manual car. If you invest properly your savings can be ₹40 -₹ 50 lakhs in 5 years and you can get a good car with half the monthly interest! Your capital is preserved and you can be assured of interest. Think of it, your money working for you, it's like a second person working for you! In due course your investment can give returns that will be more than your salary.
Regards,
The Rationalist.
Hey, really like you suggestion. I would like to add my scenario here. I live in Singapore and I am coming to 40 this year.

I already a home worth 2 crores in Singapore. I also have savings of 1 crore in Singapore. Have a home in India and also few pieces of land.

I am planning to return to India and live there from June this year. I intend to bring around 40 lacs and I also plan to buy a car (used car is also good) with in 10 lacs.

So I will have 30 lacs after I put 10 lacs into few purchases (including a car). How can I invest the 30 lacs to grow it further? what will be the growth potential?
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Old 1st April 2016, 21:23   #74
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Assuming you don't have home loans, below is my advice.
If your take home is 60K per month. I am assuming your total CTC is around 9Lacs fixed without variable pay.
You shouldn't buy a car which costs you beyond 9 Lacs.
Make a down payment of 5 lacs and take a car loan for 4 lacs. You can get excellent examples of pre-worshipped cars in 9 lacs.
If you insist on new car there are a lot of choices.
You will still be left with 12.5 lacs. Invest it else where.
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Old 1st April 2016, 21:37   #75
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Buy a pre worshipped petrol car. Initial & maintenance cost will be very less, will compensate running cost easily with the price difference between petrol & diesel just about Rs.10/-. in case you have to go onsite again then you need not worry about the car being used less.
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