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Old 2nd April 2016, 11:13   #91
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

While I have not much to add, and all that had to be said has been said already, I am glad this thread exists! thank you DMD and others for the valuable inputs. I have switched jobs recently and was looking for an AT/AMT upgrade from my Nano.

What this thread has done is to make me click on the Team-BHP classifieds, and relook at the bank statements once again to see where I stand. And I think I will just wait for the new metro lines in Delhi to open!
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Old 2nd April 2016, 12:43   #92
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hi I probably understand what you are saying as I am a 35 year old myself with enough of funds to buy a high end premium car in the 50 lakh bracket and still have enough of savings. Being a car lover myself, I also went through the same dilemma as my dream was to own a Merc; whether used or brand new. However, after a lot of thought I realised that cars are products that only depreciate where I feel at this age it is the best time to build 'your own' assets and empire rather than splurging your hard earned money on luxuries that will give you no returns in the future.

My personal advise is to invest you money now in stuff like real estate that will give you returns in future where you can retire early by may be 45 or 48 and then enjoy the luxuries like a good car and stuff.

Last edited by GTO : 2nd April 2016 at 17:45. Reason: Removing long quote
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Old 2nd April 2016, 13:00   #93
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

My simple advice:

Buy a car of up to 8 lakhs only. Always remember one thing - I would rather drive a cheaper Maruti Baleno and sleep peacefully at night than drive a costly S-Cross during day and not sleep peacefully at night!

Safety and comfort of your family is the most important thing. With a take home of 60k/month I would say you should stretch up to a Baleno/Swift price range only and not think beyond that! Purely from a financial perspective, I am of the opinion that you should look at a segment even below that. How about a Celerio?

Before buying the car, first discuss with your family why do you need a car. I mean write down your expected usage pattern and see if a smaller car fits it (I think it should).

Last edited by Saanil : 2nd April 2016 at 13:02.
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Old 2nd April 2016, 13:19   #94
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Our family was almost in the same situation however we did not have the cash to buy the 1.6 outright when the Scross was launched. After couple of nights brainstorming with siblings, I cancelled the booking and purchased TWO pre worshipped cars(Ritz diesel and Swift P) for less than half of what I would have spent on the 1.6 at that time. (Currently thinking of letting go of my 2004 waggie and scouting for k10 vxi).

I would agree with the above poster too . Try the Baleno/Ciaz once and see if you really need the extra power of the scross and discuss your requirements with your family.
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Old 2nd April 2016, 14:09   #95
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Have been going through the thread and its quite an interesting topic. I feel the same as you though for a lot many more things that i go to buy than a car. I'm just a couple of years younger than you and recently married though with no kids as of now but when i started working the first ride i picked up was a used honda civic. Kept it for a good 5-6 years and in the meanwhile invested in a property for future use of course and changed my civic before my marriage to the skoda octavia. The octavia was bought on the maximum loan available of 90% of ex-showroom price and for a 3 year tenure with emi's of around 51-52k. The money saved has been invested in the meanwhile where its comfortably earning me 3-4% more than the interest rate on the loan.

Now atleast i'm comfortable enough with the comparatively higher maintenance costs of the skoda and the insurance fuel etc don't really put too much of a dent on my pocket do i look back and consider my decision of purchasing a civic second hand as a wise one. Few years in a pre-worshipped vehicle and then a car with an emi which left me my initial money to invest elsewhere at the end of which i'll be left with a depreciated asset but having experienced owning and driving a fabulous vehicle. All in all a win win situation.

My suggestion would be a pre-worshipped car maybe from the team-bhp classifieds where maybe the car costs a little more than the market price but you'll be guaranteed a peace of mind if its a car owned by a team-bhp member. (case in point- i'v listed a family car in the classifieds and everytime i get a call i do not negotiate as i'm anyway too much in love with the car to let go and the longer it stays in the classifieds with no serious query the more time i'll have with it, also gives me a genuine reason to give to my dad on how no genuine buyers are available for it ) Just goes to show how car crazy we guys are and you can be rest assured that it'll be very very well maintained.
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Old 2nd April 2016, 14:30   #96
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

In my humble opinion you should simply refrain from buying S-cross. Team-Bhp is leading car forum and trust me if more than 50% people are saying No to buy a better car than its simply not a good decision.

I am also 32 year old and was also in similar situation when i wanted to switch my 5 year old Vento TDI 1.6 with S-cross 1.6. Almost all my friends want me to let go of Vento due to fear of higher maintenance and now since i am outside warranty. However i choose not to because

1. I have just become father and i first want to start saving for future plans like child education, collage fee, marriage expenses etc. So instead of going for Car EMI, I have started saving as following
- Few thousands per month in RD
- Few thousands per month in PPF
- Few thousands extra pre payment of my SBI House loan.
- 5K per month RD for my next car purchase. Resale of Vento + This capital will be my downpayment. Rest loan
- Fixing 30-40K per year for Vento meanwhile (10K Insurance + 10K Service + 15-20K Misc maintenance apart from service). Its still much much lower than total EMI of new car paid in a year. Besides its old So no worry if i plan to remap it now and have more fun with it. I would not remap a new S-cross.
- Reading more on equity and SIP etc.

2. I think enough has been said on this forum and its clear that when we purchase car we always give away to temptation and start justifying increased budget. Please make sure that thrill of car will not last long enough however money saved for future will. Spending all your saving on car is definitely not advisable. Please also remember only you are car enthusiastic so going for S-cross 1.6 will only bring "Grin" on your face, however if you spent all your saving and then cut down on life style and necessary family expenses than it will effect happiness and joy of all your family.

3. I do agree to another folks advice on buying hatchback like Elite I20, Polo TDI, Baleno etc which will come under 7-8L and their insurance/service etc will also be not that much. Eventually they will be even more fun to drive as all of them are still good step up from Ritz. I would pick Elite I20 CRDi from this lot.

Here at Team-Bhp we always say "Listen to your heart" when we buy new car but let me tell you my approach "Always listen to your HEAD, If HEAD gives more than one option than and only than listen to your heart to pick one of them"

Last edited by karansm4u : 2nd April 2016 at 14:43.
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Old 2nd April 2016, 14:58   #97
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Let's just take two aspects - there are more but I think these are sufficient.

1. Your biggest exposure which hasn't been covered is the total cost of bringing up one kid which will be approximately 1.5 crores until the time he gets a job and is independent. This cost is assuming that you need to pay capitation fees or send him abroad and wedding expenses etc. The amount indicated is on the lower side and it could easily be 2 crores and more. If you were to have another child the amount would be 4 crores. Assume jewellery etc if is a girl and and you are looking at a lot more. 7.5 lakhs is nothing for a kid in today's situation.

2. You are betting on your job and so you need to provide for various contingencies such as cyclical trends in business (boom / depression and its effect on the organisation), employer going belly up, major overhaul in the organisation post an acquisition etc. These could impact you in various ways.

When you look at just these two aspects, it would be a bit too early to spend almost all your liquid cash on a car rather than invest to cover future expenses.
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Old 2nd April 2016, 15:43   #98
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

It is a very bad idea to spend all your liquid assets on a car. If I were you, I'd consider saving up more money for the Kids future, Medical bills, Retirement etc. Have you considered the kids extra curricular activities?

I also recognise the need for a car once you are back. My suggestion would be to buy whatever car you can afford (after accounting for savings, investments, rainy funds and cost of living) with an EMI of no more than three years.

I would also plan on keeping the car for a minimum of 5 years. Preferably 7-10 years. This will allow you to scratch the car itch, be financially prudent, and have fun in life.

Or buy a 2-3 year old pre-owned car with cash. Drive it until its falling apart on you, or you reach the 7-10 year mark and only then upgrade.

For the love of god, do not sink a significant amount of your liquidity into a car. I understand restraint can be frustrating. It sure is for me with Watches and Cars, but it is often times the more sensible route.

Last edited by imp! : 2nd April 2016 at 15:49.
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Old 2nd April 2016, 16:16   #99
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Contrary to most who have advised you to take loan to buy a car when you have money, I think it is not financially prudent to do so. No risk free investment is going to provide an interest higher than the car loan interest which you pay in the guise of EMI.
As a matter of fact highest risk free interest one can get is at least 30% less than the interest paid for car loan. Car loans now-a-days cost >12% interest. Most Banks do some financial manipulations to show interest rate <10% (Say 9.5%). Interest rate for loans on Pre-owned cars are higher than 14%.

So I suggest buy a car which you can afford to maintain on a long run with complete down payment. Also put in the EMI amount monthly into a good Mutual fund SIP and see your money grow.

Lots of people have suggested to go for preowned cars and I do second the same.
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Old 2nd April 2016, 16:21   #100
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Like most on this thread have concluded - if you have liquid cash, buy a used car. Save on depreciation = save money for future.
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Old 2nd April 2016, 16:37   #101
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Dear All,

After weighing all the options and discussing with my wife and considering the opinions I have been getting in this forum, I think I am deciding towards the following:

1. Invest the cash I have in something sensible which provides a decent return (I need to find one soon)

2. Save as much as I can here to make enough money to buy a decent new hatch or a used Toyota/Honda cash down.(AT least 80% cash down)

3. If its a decent new hatch decide which one it should be and keep an eye on the new launches as well

Talking about decent new hatches, I have already started going through the ownership reviews of Hyundai i20 1.4D and VW Polo GT TDI. Looks like a good upgrade from Ritz.

I will definitely keep this thread alive and let you know how things go and what car I am going to buy.

Reverse Gear: I just told this to my mom and she was like: "Isn't this exactly what we were telling you ? And you needed to hear it from someone else to understand" ?

Thanks a ton to each and everyone of you.

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Old 2nd April 2016, 16:56   #102
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

I love cars, but financial security always comes first. I purchased, (after two secondhand ones) a brand new car only at the age of 40. I bought a Maruti Wagon R VXI in 1996, even though I wanted a Swift VXI which was more expensive by Rs.60,000. The Swift LXi was available at almost the same cost of the Wagon R Vxi , but did not have a tacometer though it would have been more fun to drive due to bigger engine & tyres.

Five years ago, at the age of 45, I purchased a Ford Fiesta 1.6SXI , even though a diesel would be cheaper to run. Because at that stage of my life I felt I could finally afford to indulge my passion for driving. Both cars have given me great pleasure, and both have gone on many long trips.

My suggestion is go in for a new car which will be fun to drive but cost less. Preferably keep that car for a full 10 years. At that time, carefully evaluate your financial status and then only, plan to buy a more expensive car.
Best of luck and do let us know which car you buy.
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Old 2nd April 2016, 17:19   #103
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car? have asked a complex question which is indeed very difficult to answer.

Let me add a perspective.

What are your future plans? Will you keep travelling due to work or will you cease to travel.

In case you will be travelling frequently or for longer durations in the future as well, it is a no brainer to not buy a car which you would not be here to use.

On the other hand, in case you will travel infrequently or will work from your home country / city, then the question on what amount to spend is more relevant.

Since you are not planning to return before next year, you should hold on to your purchase plans for some time.
Why so? Well, at the rate that new cars are being launched in India, you will have some more choices by the time you have to actually purchase your car.

Also, would suggest you do not spend your complete savings on a car. Rather, you may want to earmark a budget for the same and then scout for your options around your budgeted amount.

Remember, this is not your last may want to use some of your current savings as an investment now for your next one.

Who knows, your investment may keep paying for your new cars in the years to come.

As an example if you decide to part with 12.5 lakhs for the car & invest the remaining 5 lakhs with an average return of say 10% then your invested amount will keep compounding and growing.
If you decide to go for another car in the next 7 years or so, the re-sale price of your existing car plus your savings will help pay for your next purchase.

Again, will re-iterate, there is no direct answer to your question. You will have to go through everyone's inputs before deciding which approach addresses your dreams as well as suits your financials.
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Old 2nd April 2016, 17:58   #104
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Originally Posted by Chetan_Rao View Post
Any particular reason for not putting the Figo 1.5 TDCi Titanium+ on that list? It's moved away a bit from the Ford DNA, but still better FTD than most of its immediate competition.
The new Figo is a good all-rounder. But there are better options in the market.

Originally Posted by View Post
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.
Sir, I'm happy that 2 lakh people a month disagree with me . How else would pre-worshipped enthusiasts like me get a choice in the used market?!

Originally Posted by akshay1234 View Post
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
Very good advice. When I started getting bored of my City Vtec, I spent a lakh in modifying & sprucing it (w-a-y cheaper than buying a new car). Did the same with my Civic.

Originally Posted by Saanil View Post
Always remember one thing - I would rather drive a cheaper Maruti Baleno and sleep peacefully at night than drive a costly S-Cross during day and not sleep peacefully at night!
Yes! Yes! Yes! . Well said. I'd much rather buy from a segment that I can easily afford, than keep an eye on the bank account every month when the EMI is due.

Originally Posted by DieselFan View Post
Interest rate for loans on Pre-owned cars are higher than 14%.
But he has liquid. Put that in a fixed deposit and take a loan at +1%.

Originally Posted by DMD View Post
Reverse Gear: I just told this to my mom and she was like: "Isn't this exactly what we were telling you ? And you needed to hear it from someone else to understand" ?

Look forward to your ownership report, DMD!
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Old 2nd April 2016, 19:28   #105
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Interesting discussion!

Developed western countries have "social security" in place for their citizens. This takes care of most of the needs of its retired senior citizens; Most importantly their medical expenses. This allows youngsters to go overboard and enjoy their life. In general, governments tend to encourage this, as the cash flow / circulation boosts market sentiments.

Saving culture itself is rare to be found: So much so that, it leads to a popular joke "People there work like donkeys during the week days and then, during the week-end, they act like monkeys!".

In India, things are very different. We are usually conservative and have a tendency to save money. This becomes necessary as our government does not (yet) provide us with social security. Every day, we see so many retired senior citizens struggling to meet their ends, mainly because of the inflation and increasing in commodity prices. Medical expenses have been sky rocketing and I have seen few elders who had to sell their only property to meet their medical bills. It is painful.

"Learn from history or learn the hard way"; We, the present generation need to be cautious. Medical insurance is still not common in India - Awareness itself is very low at present. This is one important investment for each one us; Much much more than the life insurance.

Also, it is more important not to get in to wrong / bad habits and loose money big time! Stay away from any sort of gambling! Greed does not help in a long run. Hard work and personal discipline helps big time! "Fortune favors the brave" is a commonly mis-interpreted phrase. More sensible thing would be to take "informed calculated risks" when needed and move forward.

But, after all this philosophy, we still need to live "Today" and then "save" for tomorrow. Otherwise, there is no point. Or even so, "No point in buying nuts after we loose all our teeth!".

There are many school of thoughts. One of them is "Save 40% of what you earn for the rainy days". That is, spend 60% of the present day earnings and live the life you can afford. Invest the balance 40%. Preferably, 20% in low risk / low returns investments and 20% in moderate risk / moderate return investments.

Originally Posted by DMD View Post
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)
Anyway, you are back to India after at-least a year. By then, the car you are looking for (S-Cross) will be available in the used car market. Buy it for half the price and have fun!

Purchasing a new car works good for people who require Tax benefits in the form of depreciation - Not usually for salaried class. Please don't worry too much about it. It makes more sense to go for a used premium car within the budget, rather than stretching the budget to buy the same car "Brand new"!

Just my 2 cents!

Last edited by Chethan B G : 2nd April 2016 at 19:49.
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