Go for a loan OR pay upfront? Pros and Cons?

Rtech · 9th May 2007, 17:27

I don't see how, by closing the loan early, you escape the IT radar. Aren't banks supposed to inform the IT dept. of all transactions over a certain limit? So if Mr.X pays Rs.Y lakhs after 6 months to close or partly repay his loan, wouldn't that show up on the radar as well?

Zappo · 10th May 2007, 01:27

Besides the regular suggestions of not locking your funds, wise investments etc I can give you two very compelling reasons which are seasonal and very relevant at the moment.
1. The interest rates have hardened up. So your money fetches more in interest even in no brainer schemes like FD. Considering that you have the ready cash if you put it in a long term FD you will fetch something close to 10.5% at the least.

On the other hand, inspite of the rates hardening the car manufacturers are getting restless because of stationary stocks. So the likes of Toyota, Hyundai and Maruti are tying up with the banks for cheap loans. For the latter two you can pick up their select models for as low as 7.99% rate of interest. So your funds can remain parked at 10.5% whereas you pay at 7.99% without any financial skullduggery.

2. Currently the IT dept has become hyperactive on big purchases. A new car purchase with upfront cash payment immediately flags you as a possible big fish from whom IT guys can extract some real moolah. So expect a summon and lot of harrasment at the least to get out of that if you get a summon. AFAIK all car showrooms are supposed to send a list of cash paying buyers to the IT dept on a monthly basis.

9th May 2007, 17:27	#31
Rtech Team-BHP Support Join Date: Apr 2004 Location: Bombay Posts: 5,770 Thanked: 359 Times View My Garage	I don't see how, by closing the loan early, you escape the IT radar. Aren't banks supposed to inform the IT dept. of all transactions over a certain limit? So if Mr.X pays Rs.Y lakhs after 6 months to close or partly repay his loan, wouldn't that show up on the radar as well?
	() Thanks

10th May 2007, 01:27	#32
Zappo Team-BHP Support Join Date: Oct 2005 Location: Hyderabad Posts: 5,922 Thanked: 2,699 Times	Besides the regular suggestions of not locking your funds, wise investments etc I can give you two very compelling reasons which are seasonal and very relevant at the moment. 1. The interest rates have hardened up. So your money fetches more in interest even in no brainer schemes like FD. Considering that you have the ready cash if you put it in a long term FD you will fetch something close to 10.5% at the least. On the other hand, inspite of the rates hardening the car manufacturers are getting restless because of stationary stocks. So the likes of Toyota, Hyundai and Maruti are tying up with the banks for cheap loans. For the latter two you can pick up their select models for as low as 7.99% rate of interest. So your funds can remain parked at 10.5% whereas you pay at 7.99% without any financial skullduggery. 2. Currently the IT dept has become hyperactive on big purchases. A new car purchase with upfront cash payment immediately flags you as a possible big fish from whom IT guys can extract some real moolah. So expect a summon and lot of harrasment at the least to get out of that if you get a summon. AFAIK all car showrooms are supposed to send a list of cash paying buyers to the IT dept on a monthly basis.
	() Thanks