[iskandariya]

Originally Posted by DasAuto1985

Unfortunately, before buying my car I read all the ownership threads, reviews but missed out on this thread. Now I own a car for which the EMI is too much and its putting a dent on my finances. I am married with a kid, and yes I know it was stupid and should have done more financial planning and put in some thought into it, but now its too late and I can only curse myself. Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

Branch out, Depending on your risk taking ability

1) Transfer your loan to PSU bank , PNB or SBI
2) If good in trading try short term - Comes with Risk
3) Get your vehicle Evaluated as someone suggested and sell it off.
4) Leverage pooling
5) Insurance re-evaluate your option when next premium comes up 3rd party or Zero Dept. (highly dependent on your driving your city commute traffic driving and luck)
6) Service like Brake pads and stuff are inflated in Service centers
7) Vehicle if not registered Temp no
Can be used till 6 months you can offset that expense for a while
8) Weekend leisure ride , use alternate modes of transport for work days all fuel and other related expenses get reduced
9) Rent out the ride, - Risky stuff but pays
10) Reduce your sins - Drinking Smoking, Frequency of eating out, Mall shopping

If you are barely making the payment means by fine tuning your expenses you will be able to tide over it , just don't make another impulse purchase that will land you in a well.

[Mission_PGPX]

Originally Posted by DasAuto1985

Unfortunately, before buying my car I read all the ownership threads, reviews but missed out on this thread. Now I own a car for which the EMI is too much and its putting a dent on my finances. I am married with a kid, and yes I know it was stupid and should have done more financial planning and put in some thought into it, but now its too late and I can only curse myself. Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

Been there and done that mistake to follow heart over head. You are the best judge of your finances and mental peace. You only can decide whether exit is the way forward or holding onto it. Cars will come and go, but family priorities cant be compromised because of fulfilling your own dream. If you are compromising heavily on lifestyle, kid's future savings, your yearly travel plans, fulfilling small but luxury treats (which one deserves every now and then), THEN consider letting the car go. Don't forget the yearly maintenance + hefty Insurance costs, which the car would demand to remain in top shape for you over and above your EMIs. May the wisdom prevail!!

[Naetik30]

Originally Posted by DasAuto1985

Unfortunately, before buying my car I read all the ownership threads, reviews but missed out on this thread. Now I own a car for which the EMI is too much and its putting a dent on my finances. I am married with a kid, and yes I know it was stupid and should have done more financial planning and put in some thought into it, but now its too late and I can only curse myself. Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

I would recommend you watch a few videos of Mr. Dave Ramsay on youtube. Most of them will answer your question.

I would sell the car in the below cases -
1. If the car EMI > 20% of monthly income (after all deductions).
2. If the car cost > 10% of my networth
3. If loan > 50% of car cost.

I see most members are advising against selling the car. Infact if you sell the car, you might even end up on the negative, as current value of car may be less than the loan outstanding. But if it gives you peace of mind, please do sell and just take the hit as a learning.

Lets say you have a loan of 15Laks. You can close this by taking a small hit of say 1Lakh. You should do it. It would be a great lesson for you in financial planning. And one that you would never forget.

And if you sell, get a cheaper car (or a used one) that you can afford (i.e. < 10% of your net worth). And preferably with cash and not a loan.

[DasAuto1985]

Originally Posted by DasAuto1985

Unfortunately, before buying my car I read all the ownership threads, reviews but missed out on this thread. Now I own a car for which the EMI is too much and its putting a dent on my finances. I am married with a kid, and yes I know it was stupid and should have done more financial planning and put in some thought into it, but now its too late and I can only curse myself. Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

Thank you all for your responses. Have got some really valuable insights. I probably will keep the car as its been put to optimum use as of now and to be honest the downside of the selling it and being without a car is too lot more than the issue of EMI. I have stopped buying things for myself, starting from small things. I buy only when its absolutely necessary, for example replaced headphones for work only when the old one stopped working completely. Yes, haven't been able to do some major ticket items, like house renovation, but nothing that's very urgent/important. Hopefully will be able to finish off the EMI in the coming years without too many big sacrifices. Any new car buyer reading this, spend considerable amount of time to go through every post in this thread, before buying your car.

[Way2Jimny]

Originally Posted by DasAuto1985

Thank you all for your responses. Have got some really valuable insights. I probably will keep the car as its been put to optimum use as of now and to be honest the downside of the selling it and being without a car is too lot more than the issue of EMI.

I'm happy that you decided to keep your car. Don't be too harsh on yourself.
You are working hard for you and your family and you do deserve that nice car.
Few years down the line you will feel happy that you got your favorite car.

My only advice is, maintain it well and keep it for at least 10 more years. It pays you back down the line compared to buying something cheap now and upgrading later.

[Shanksta]

Originally Posted by Rajat347

As per SBI, car's ex showroom price should not be more than 60% of your annual take home income.
This is what I was told when I went there for a car loan.

Incorrect info. Having opened and closed multiple car loans from SBI, let me elaborate.

The EMI payment for the loan (amount/tenure) you seek should not be more than 60% of your net monthly salary. This is including all your other EMIs for existing loans.

A couple of years back when I was buying my new car, SBI refused to give me a 5 year tenure as the monthly EMI for the new car loan plus my existing EMI were totalling to more than 60% of my net salary. I had to take a longer tenure to get the loan sanctioned (already closed after 1 year with no foreclosure charges).

If they really had the policy of car’s ex-showroom price being less than 60% of take home salary to approve a car loan, they would have no customers.

[ramki.grandhi]

These calculations and suggestions are extremely helpful for a new buyer or even experienced buyer. Along with these, I would strongly suggest to consider some buffer while buying the car for all the employees in corporate or IT sector. Given that industry is in the middle of many layoffs and cost cuttings, have some large chunk of buffer for a rainy day!

[DustyWanderer]

For a middle class family, life is full of compromises.

A new car depreciate about 30% of its value the moment it is out of the showroom. Financial stability is more important in Life as it brings peace of mind and happiness and also you have mentioned that you have a kid, so it is very important to save up some money for their education considering any unforeseen future expenses and inflation.

I would advice you to sell the car and if there is any loan amount balance remaining, check with your bank to adjust the tenure or transfer the remaining loan amount to a new bank.

We never know when we need any urgent funds and if you are not able to save some amount for your reserve/emergency fund and for your child's education along with daily expenses, then it is a good option to sell the car.

If there is really a requirement for a car then you should definitely consider used cars route. Spinny, Cars24, Olx etc provide tension free ownership of used cars.

[Asoon]

What Car @ What Salary ?

If opting for new then 30-50% of annual CTC is the limit and if going for preowned then 20-35%. Preowned should be 100% self financed (no load) it will be a disaster paying high interest rate on a preowned car. For the new car one should target at-least 30-35% self financing and 65% loan (better no loan).

And make sure you hold on to the new car for at-least 7 years and preowned for at-least 4 years to ensure least possible depreciation hit.

Unlike a home loan, car loan period is 5 / 7 years which means a hefty EMI, Owning car makes you poor, you are paying premium (interest) on an asset (car) which is depreciating fast (for the European brand you loose 50% in first 4 years).

Also, if your annual driving is less than 6K Kms then do not spend on fancy car, go for a segment lower than what you can afford. Be it petrol or diesel ROI does not makes sense if the driving is too low [6-12K petrol, 12K+ diesel].

[marutifan]

Originally Posted by DasAuto1985

Now I own a car for which the EMI is too much and its putting a dent on my finances.

My advice is to imagine yourself 2 years from now. Your salary will most likely increase and a big chunk of your car loan will be paid off.

If this continues to trouble you and I really hope it doesn't, then by all means look at selling it. Life is too short to live with constant worries.

FWIW, having been in similar situations in the past, keeping the car and making good memories with your young family is what you should aim for.

[pandabear]

Trust me I have been in the same situation. Best way is to be positive.

You can do two things either you sell the car, or the positive approach would be: you can work towards increasing your income so that it is affordable and you can keep the car. Therefore I would suggest trying to increase your income eg. upscaling and trying out new jobs etc. Once your salary increases, trust me, you will not regret your purchase. My best wishes to you to take this path and get out of the rut.

As the saying goes, there are two ways to look at the half empty or half full glass; just take the situation as a motivator for the next step in your life.

We are the dreamers!

[Mr.Ogre]

Originally Posted by DasAuto1985

Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

I was in the same situation as yours. I brought a Honda City in 2013, and my parents and wife were not at all happy because my salary wasn't that great.

However, I chose to upgrade my skills and found myself a better paying job in 3 months time.

Your handle says 1985, so I am guessing you haven't crossed 40 yet. If I were in this situation I would just try to keep the car and work towards increasing my income.

[jithin23]

Originally Posted by DasAuto1985

Unfortunately, before buying my car I read all the ownership threads, reviews but missed out on this thread. Now I own a car for which the EMI is too much and its putting a dent on my finances. I am married with a kid, and yes I know it was stupid and should have done more financial planning and put in some thought into it, but now its too late and I can only curse myself. Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

Hey there, don't be so hard on your self. You live once and like other pointed out, please enjoy the car as long as you have it. I am 11 years younger than you and I might be much more stupid to own 3 cars from a defunct brand, plus I have to run a house to take care of my parents + sis. Fortunately, only one car of mine still has its loan and I can clear that out in a year.
It's all about how we handle or manage our money and I too have only a single income source predominantly. My cars motivate me to earn more



My suggestion would be to:

1.Find and monetize a side hustle (it can be even art and craft and people are crazy to buy anything in bangalore provided it adds value to them). That side hustle can take care of your car's expenses.
2. I'm not sure if your wife works, but if she does, you can use her income to pay all the bills and run the house and yours to save/invest or clear out existing loans.
3. Start an ELSS for 3 years as it's tax exempt and you can save up as much as you wish with ELSS and using the dividend, you can clear your car loan.

If you still find it uncomfortable, sell the car and get a used diesel car to optimise your costs.

Apart from these, I don't think of anything else at the moment. I'm sure as time passes, even your income will grow (I know inflation will negate it), but all such situations will pass. At one point of time in our lives we couldn't even afford a movie ticket due to loans, but we somehow made our way through and there's always light at the end of the tunnel.

[quasimodo]

Originally Posted by Asoon

What Car @ What Salary ?

If opting for new then 30-50% of annual CTC is the limit and if going for preowned then 20-35%. Preowned should be 100% self financed (no load) it will be a disaster paying high interest rate on a preowned car. For the new car one should target at-least 30-35% self financing and 65% loan (better no loan).

Personally- I don't quite agree with it. For my cars, I like to pay the minimum downpayment and the rest through loans. If you have the money then it's much better to NOT use the money for the purchase but invest it for 5 years and maximize your loan (assuming you're credit prime and get a decent APR loan.
I have attached a simple calculation model for you to understand it.

[dearchichi]

Originally Posted by DasAuto1985

Any tips/ideas on how to mitigate this, other than of course to get a job that pays more

While all of the advice here is well-meaning, I'd encourage you to approach a fee-only financial planner from this list and discuss your finances with them. They'd gauge the overall situation, your near and long-term financial goals and planned expenses and come up with a comprehensive plan to work them in.

Mr. S. R. Srinivasan, who is on that list and is very active on Indian financial subs on reddit, might be a good option. Most of these advisors offer a hour of free consultation, so both parties could judge each other before engagement.