[sudeepg]

Here goes my 2 paisa advise - From my personal experience

17.5 Lakhs in the bank account is not trivial. If at all possible, try to do this

a. Explore Company leased options. This way, you pay an EMI but a significant (I mean significant) payout goes from taxes you pay.
b. You do not need to pay a single penny for booking and delivery.
c. You get tax benefits on fuel purchases, maintenance and some accessories.
d. You still get to keep the 17.5 Lakhs in your bank account and can enjoy the security of the money and also invest a portion of it for your family and son's future.
e. You can buy back the car at the end of the lease at a depreciated value or sell it off and perhaps not lose much.

So what is the downside?
If you decide to leave the company before the end of lease, you can incur a significant loss.

[DMD]

Originally Posted by Rajeevraj

A lot has been said already. Let me add my comments.

True, and the current scenario tells me that I could be easily here for another couple more years. I was only thinking about a worse case scenario, i.e. if I have to go back end of this year and with the current savings, would it be appropriate to buy a car. With the options listed here, going for an FD loan seems to be best.

Regarding my financial status exposure, I think I have maintained my anonymity I felt unless I lay out the facts right, it would be difficult for people to provide a clear advice.

[rdhawan15]

Since it's your money, you ought to take the best decision.If I was in your position, I would have gone ahead with creating an appreciating asset class in the form of investments into mutual funds or stocks over a scattered period of time. I would have set aside the amount to be auto-invested over a period of 12-24 months time.

A car is a depreciating asset, and if I was looking to deploy an extra cash element, it would be definitely on a growing asset class. Money supply is a pretty dynamic concept. Save it when the supplies are strong to ward off any slow-supply times in this global situation.

[DMD]

Originally Posted by rpunwani

There are many ways to buy your car and still have most of the corpus you have saved.

Option 1: You can invest the money in a Bank FD and then take a loan against the FD. The bank will give you upto 90% of the FD amount as loan. The rate of interest charged by the bank is 1% higher than the FD interest you earn. So what you end up doing is pay back into the loan account. This has a lot of flexibility w.r.t. repayment. If you are strapped for cash in a particular month, you dont pay back into the loan account. If you have extra cash, you pay back.

Option 2: Take a car loan from a reputed bank (interest rate can be negotiated a bit based on your CIBIL rating) Use your savings and invest in a high return NCD, currently some companies give NCD's at 16% interest. With the interest earned, you can pay back the EMI easily.

Do not put all your money into buying a car. Logic is that at your age your salary will keep going up and the payout (EMI) will keep reducing as a percentage of your future income. Say your EMI is 20,000 pm and your salary is 1,00,000/- At present your EMI payout is 20% of your income. In a few years, this will reduce significantly.

Hope this helps.

"msdivy" has provided a very informative post. Reading that makes me think that a loan against FD would be my best bet. So I think I will go for Option 1.

Like I mentioned in one of the replies above, its more than likely that I will continue here for another few years. And I'd have better than 17L with me. I was only thinking about a scenario if it would be ideal to spend the money in case I return earlier than expected.

I think I have my answers now. This forum is amazing. Thanks again!

[rakesh_r]

I was in the similar Dilemna. So here's what I have planned to do. I discussed extensively with dad and here's what we concluded- I needed to take loan for the new car period, but the catch here is my dad is the financier for the car. I pay him the EMI's as if i am paying the bank from whom i would have taken the loan for the same tenure. In this way i can foreclose the loan faster as and on when i get my bonuses or incentives.I have already filled the ECS mandate. In this way-
1-I dont get my RC Hypothecated. That saves me from the headache of running to get the latter removed.
2-The money remains in the family plus my father earns some more money and i am the only son so no issues at all.
3-My savings remained untouched.

All the best.

[humyum]

I ll give you my 2 cents, just my thought process and feel free to totally rubbish it too.

If I had 17.5 lakhs in my bank account, I would buy a car of around half that value or buy a car say around the 10 lakh mark and invest the rest which would grow into something more substantial in a couple of years. Yes you live only once, but a car is a part of your life, and not your entire life. Having 8 lakhs + which will appreciate in a few years is a 'I will sleep peacefully' at night kind thing for me.

If I had money for a Fortuner, I would buy a Creta, If I had money for a Creta, I would probably buy a Swift Diesel, but that's how my mind works.

Yes loan is an option, and we had taken one too when we got the Swift Diesel 8 years back, but its a sword hanging on your head and from that experience I realised, I don't want such a sword and even if I did have to have such a sword, it would be with instalments of 4 to 5 thousand at maximum.

[DMD]

Originally Posted by humyum

I ll give you my 2 cents, just my thought process and feel free to totally rubbish it too.

If I had money for a Fortuner, I would buy a Creta, If I had money for a Creta, I would probably buy a Swift Diesel, but that's how my mind works.

True! I indeed had money for a Fortuner. I invested in a piece of land. Now rest I think I will buy the car.

[GTO]

I like to simplify. To me, the key sentence in your post is:

Originally Posted by DMD

I am 32 years old and employed in an IT firm. My take home (Indian salary) is just above 60K a month.

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.

[DMD]

Originally Posted by GTO

What I would really do in your position is buy a pre-worshipped car. They offer unbeatable value.

Dear GTO,

Just when I thought I had my answers, your post just hit me on the head. BANG!

Having read most of your previous posts/advices, and considering your extensive automotive knowledge/experience, I do take it seriously.

Now my questions to you (I am an absolute beginner when it comes to automobiles)

1. Aren't pre used cars heavy to maintain?
2. What would be the best place to buy a pre used car in bangalore? Any links to an existing thread would be useful
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)
4. If I were to buy a NEW hatchback, what would be the best choice?

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.

By the way, I am big FAN of your reviews

Regards,
DMD

[Car-tya]

Having money in the bank/hand is absolutely the best advice someone can provide you. Apply prudence and get a nice used car to start off with. Get used to expenses/costs and get used to a set and settled lifestyle in India. Given your kid starts school take an account of the added expenses. There is always a way to enjoy your life with some planning. Save substantial amount which should start compounding and keep you covered for emergencies and uncalled for expenses.

Once you have enough and I am not saying you don't have it now but you are young at 32. In today's world, enough is never enough and there is always the next purchase available to any buyer. They come with all the tools in place making it easier for you to own one right away and regret it later as a hasty decision.

A safe approach would be to divide the money into thirds and invest one part of it in a car, one part in a safe and accessible investment and one part in high returns entity like MF's or shares but understands the risks before you invest. That covers your short, medium and long term goals.

There are numerous examples on this forum on how to buy an amazing used car and how to keep it in proper running state. Please browse. The forum has also converted opinions of ones who were interested in A car and made them think about the purpose it serves more than going for it. Decide what you want it for and if it still does not deter you, the decision would be made with a bit more thought process and understanding of the pros and cons.

2 years ago I would have asked you to go out and buy the absolute best with the down payment and a loan. However having seen ups and downs in life after a period of absolutely living a dream patch, my advise would be to use a bit of caution. This however is your life and by all means go out there and do whatever that makes sense to you.

[phamilyman]

Originally Posted by DMD

I am 32 years old and employed in an IT firm. My take home (Indian salary) is just above 60K a month. (I had a long term onsite opportunity in Zurich because of which I was able to build my own house in Bangalore) Currently I am in Europe for yet another onsite deputation where I can "SAVE" 70k a month. I also have a son who will turn 3 years in a few months and my wife is a home maker.

I also managed to buy a decent residential plot in my home town (if I would sell it in 2 years, I would get a return of 20lacs and upwards approx)

Save. Hire a Merc from zoom when you need the adrenaline.

Your wife does not earn. Your son has his full education ahead of him. Splurge when the corpus is 2/3x as much i.e enough for them for a few years.

What if something happened to you tomorrow? Forget death, even disability can be even worse financially.

e.g Life can have nasty surprises. I went on a spiti ride last week. I rode really safe but The shocks from the road brought on Carpal Tunnel Syndrome. I'm unable to work at 100% till it is resolved. Thankfully I'm on the path to recovery. Sometimes you may not. Life is unpredictable. First, save for the little one who came into this world by your choice.

A S-cross is worth nothing then, but liquid cash is.

[GTO]

Originally Posted by DMD

Aren't pre used cars heavy to maintain?

Buy a car in warranty and one that has a reputation for reliability.

What would be the best place to buy a pre used car in bangalore? Any links to an existing thread would be useful

Look up my threads on used car buying. Follow all the advice to the T (e.g. pre-purchase inspection) and it'll be risk free. I've never burned my fingers on a used car. Ironically, the two cars I got burned on were new (C180, Indigo).

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)

Honda Civic
Toyota Altis (not as much fun to drive as the Civic, but a HUGE step up from your Ritz & more practical)

If I were to buy a NEW hatchback, what would be the best choice?

Safest bet - Elite i20 1.4L diesel. I love that hatchback.

Second choice: EcoSport diesel (price cut makes it VFM), followed by the Polo 1.5L diesel.

The Polo GT TSI is a beautiful car, and its acceleration will blow you away. I'm just not convinced about that DSG box's long-term reliability.

Take a spin in all these cars first. Spend the entire weekend test-driving . Go drive someone's Civic too.

[Vik0728]

Originally Posted by GTO

Mom told me 'Buy an S-Class when the cost of owning it makes absolutely no difference to you'.

What she said made a permanent impression on my head.

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

That statement alone GTO does it for me. As they say:

MOM KNOWS BEST !!


@ DMD - Dude you are young, doing quite well professionally, have a wonderful family as well, so you are all set my friend to have a peaceful livelihood.

I am not as experienced as many who have advised you here, but rest assured I can tell you that having liquid cash readily available/accessible can be a boon, especially for IT folks like us, whose livelihood almost depends on every month salary.



On the flypside, I am also the guy believes in the thought:

You live only once !!

Don't ask me how, but you gotta strike the sweet spot somewhere in between living your passion and loving a happy life.

Wish you the best for your decision and update this thread once you make one.

[Chetan_Rao]

Originally Posted by GTO

Safest bet - Elite i20 1.4L diesel. I love that hatchback.

Second choice: EcoSport diesel (price cut makes it VFM), followed by the Polo 1.5L diesel.

............

............

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 Rationalist]

Originally Posted by DMD

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

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.