[charanreddy]

Hi DMD.

A little late to the party. but here goes.

I am 32 as well and I had bought my first car with almost 85-90% loan (Chevy Beat D) about 3+yrs back. Currently, my loan is almost paid out and I can think of a much bigger car atleast 2 segments above, with out any serious changes to my quality of life. But for my second car I am going to buy it loan free and when I have sufficient money left in the bank after buying the car. At the very least the EMI for a non-necessary spend needs to be a fraction of the income. By my personal circumstances I have realized how important the peace of mind from sufficient cash in hand is.

With 17.5 Lakhs in cash, putting in an all cash purchase might look very tempting, but the moment you seriously consider signing on the dotted line, you will be thinking hard about the balance that you will have left with a tinge of apprehension ( call it the cushion against unforeseen circumstances). Which is why I believe you asked this question in the first place.

If I were in your shoes , I would think of minimum balance required in bank account and only spend the remaining. If this is too less to buy a car, then may be it is not the right time after all.

Again, just my 2 cents. hope this does not offend.

[Aakarsh]

Hello DMD!

I am following the particular thread from it's very beginning but actually I resisted myself replying to your question, reason being, I find myself too young to understand and realize these stuffs. I don't even earn a single penny of my own. I didn't want my amateur suggestion to confuse you even more.

But I tried imagining myself in your shoes and tried to analyze the actual situation. We petrolheads love cars and dream in our teeanage that when we start earning, we would buy this car, that car etc. I dream like this and believe that each and every person onboard must have thought like this atleast once!

Life is only one, that's the truth but your child and family would also live only once. The bigger truth is that your family completely relies upon you. They trust you, believe on you that whatever may be the situation, you are there for them. At this phase of life you do have your dream and passion about cars alive but you have responsibilities and duties too. I wouldn't suggest you to take any step which could make you regret in case of an emergency. That's the worse situation when one regrets upon his decision which was made out of passion.

Find a mid way. Fulfill your dream and ensure your family's safety simultaneously. Fulfillment of a dream would never make anyone that happy if it would be followed by tension and feeling of insecurity.

Find a decent used car and grab it. If researched well, you could end up buying a very decently maintained fun to drive car at a very reasonable price.

Best regards
Aakarsh

[bharatbs]

There have been a lot of opinions and the one I am going to say may sound very cliche, but I strongly believe and practice it.

Let you salary not decide what car your drive, instead let the car your dream of decide what salary you earn, because life only comes once.

Recommend reading Rich Dad Poor Dad by Robert Kiyosaki

[dockap]

Originally Posted by DMD

Hey Guys,Actual Question:
------------------
I have exactly 17.5L in my account at this point. I think I could save between 5L -8L in addition or so before I go back to India early next year.

Parents assets which will be inherited by you and your brother. Your own house and another plot of land. Nice life dude. You are coming back to India next year with 7 to 8 lakhs savings. That is still one year away. I would suggest you to invest the 17.5 lakhs cash in hand now in another plot of land and when you come back next year you can decide which car to purchase and use 4 or 5 lakhs of the 7 to 8 lakhs ( always keep 2 or 3 lakhs cash in hand) as down payment and take a bank loan for the remaining amount. Your 17.5 lakh investment may be worth 25 to 30 lakhs next year.

[Isnescrpy]

Hello DMD,

Excellent question and plenty of great answers. Being a new dad and relocating to India next year, I can relate to a lot of what you have said.

I took the liberty of compiling a list of monthly expenses. Since you haven't really mentioned your expenses, some assumptions have been made such as no rent, no EMI for house, employer provided health insurance, etc. Sorry if the numbers and assumptions are way off.

The S-cross alpha 1.6 costs about Rs 15,50,000 on-road in Bangalore. For your EMI to be less than Rs 12,200, you have to put a down payment of close to Rs 7,00,000. That should still leave you with around 15,50,000 in your bank balance next year (17.5 + 5 - 7).

You asked for an opinion, so I'll give you mine: If I were you, I would buy a Brio, Baleno, etc (I don't really have the need for speed, especially in Bangalore traffic) and invest the extra money in a long-term equity or debt fund. If you are comfortable with pretty much not having any money left over in your pay check for 5 years, then you can go for the S-cross on EMI. I certainly wouldn't advocate putting all your savings into a depreciating asset, so no to buying the car outright.

Ultimately, the decision is yours. Hope this helps a little.

[DMD]

Originally Posted by bblost

[b]How many people in your family will use this car?

90% of the time it will be me. Mainly for office commutes

Originally Posted by bblost

Do you plan to drive some 1,000 kms a day for a holiday every six months or so?
If not, then the highway manners of a SUV'ish vehicle are not needed.

I have mandatory trips to Kerala every two months. 350 to 400km up and down and yes a holiday trip once in a while as well. During my trips to Kerala, my parents accompany me sometimes and hence need an able highway cruiser which offers good comfort in the rear seat. My parents always complain about the bumpy ride in the Ritz rear seat especially over bad roads and in the ghat section.

Originally Posted by bblost

So my one question for you is,
Why do you want the S Cross?

Well, that sir is a good question.

1. Due to the reasons above
2. Trouble free ownership experience with the current Maruti
3. Bored with the Ritz driving experience. Its a very practical car and offers no fun at all (at least to me)
4. S cross simply looked a right fit, well at least until I posted the question . Now I need to re-think.

[Equus]

Buying an S-Cross makes a lot of sense for anyone who would be in your position. However, why spend liquid cash? I am sure you can take a small loan as well.
Earning is not tough, saving is tough. So a good balance of downpayment & a loan would make most sense IMO..

[samaspire]

Assuming you will buy the car after a year, you will have at least 22.5 lakhs in hand, plus some bank interest earned. One year from now, a used S-Cross might be available for about 11-12 lakhs. Buy that and still have 11 lakhs in savings You get what you want and your family will also be happy.

[bblost]

Originally Posted by DMD

I have mandatory trips to Kerala every two months. 350 to 400km up and down and yes a holiday trip once in a while as well. During my trips to Kerala, my parents accompany me sometimes and hence need an able highway cruiser which offers good comfort in the rear seat. My parents always complain about the bumpy ride in the Ritz rear seat especially over bad roads and in the ghat section.

The S Cross will offer both safety and comfort.

However I will suggest you buy the car when you are settling down in India and to DEFINITELY check the resale market.
Sometimes you find a car with less than a year or two with barely 10-20 thousand kms done. These typically come in with a hefty discount as well.

[Akshay1234]

Hey DMD,

I'm a fair bit younger than you, but I still do have some suggestions. I'd say hang on to the liquid cash. No point in putting it into something which will depreciate. You never know when you may need liquidity, be it an emergency or something else.

Keep the Ritz for a few more years, maybe do some mods on it (spend 1.5l and get a remap, new tyres and wheels, maybe shock absorbers, leather seats, etc) which will make you fall in love with it again. And then get something far better. If you just have to change look at the pre owned route as GTO suggested.

The S-Cross is no Ferrari, and I don't think can be considered a dream car. Now if the situation was different, and you were getting a vehicle which you normally wouldn't get at a certain price, then it would have been more justifiable spending liquid cash on that vehicle. But the S-Cross is always going to be there at that price.

Its not like your running out of time anytime soon. Why not hang on and maybe get a BMW a couple of years down the line?

IMO as much as we love cars and enjoy them, they should never be at the expense of financial security or at the cost of other essentials.

[MDED]

DMD,
Congratulations on your solid financial condition, but as they say take everything in life with a pinch of salt. Life is a vicious cycle, everything goes up and comes down. Buying your dream car should always be on top of your mind, because we live once and we ought to indulge, splurge on things which makes us happy.
Having said that, being a banker I would advise you to take few lakhs of car loan and set aside the balance money in a long term equity mutual fund. If your tax liability is going to be on a higher side, then you can opt for investment in PPF or ELSS. NPS is a good option too. The point here is to understand the game of cycles. Today what we may have, tomorrow we may not.
Go ahead take the plunge but ensure you have ample amount of plain life insurance in your name to cover all your liability (current and future). I would recommend 100 times of your gross salary per month as Life insurance sum assured.
Live your dreams DMD, because kal ho na ho!

[mayankk]

If you put your corpus in decent funds, the returns could fund your EMIs if you go for a loan, keeping the safety front intact.
I am not saying this as any kind of financial guru, but my funds keep giving me healthy returns, though a bit less than your amount. If you have to be pedantic, what you save from now on could be your down payment.

But again, its dependent on how secure you feel with the money, and without.
Like people say, you only live once. Dont spend too much time deciding.

[Visaster]

That is a commanding position on the financial profile.
I not sure how this chit funds works, but if you say you have all things sorted out, just go and buy the car, but please think twice on the decision on buying Scross of all the cars.

Think that you are buying the car from the growth of the value of the land than the liquid cash at hand.
Don't put all the money into a single product, always part finance your buying.

[R2D2]

Let me be honest with you and I concur with what some have advised - a car, especially the premium makes/models, is one of the fastest ways to LOSE money. Resale values drop the minute you drive it out of the showroom and then onward by the month if not week.

I have debated several times to upgrade my Toyota to one of 2 German marquee brands. Every time I consider the outlay and expense in terms of maintenance and depreciation I hesitate. It may take me a while to sort this out but I err on the side of caution when it comes to expenses that cost as much as a small flat/apartment. I am not a business man who can avail of depreciation benefits et al. So IMHO for a guy with a job a car is a white elephant like no other. There are far better things I could do with that money which will benefit my family in the long run.

It's not just job security one needs to consider. In an era where health ailments strike at a younger age (I've known people die of heart attacks at 42, 31 and even 28, two of them in the office during meetings) health is yet another factor that affects how long you could work. One's mortality also plays a big role in putting priorities in the right perspective.

Just my 2p here, I don't intend coming across as a wet blanket.

[noopster]

Some good advice on this thread.

My 2 cents: buying a car for cash makes sense. Taking a loan on a depreciating asset is a losing proposition. Also buy a used car. A car loses a big chunk of its value in depreciation in the first 2-3 years, so you will get a bargain plus you won't lose much when you sell it off.

Don't take this the wrong way but with a take home of just 60k and a young family to support why are you planning such a big spend on a car? The novelty of a great car (versus a sensible good one) will wear off soon enough.