Safe and automatic 7 seater car to replace my Honda BR-V

Mahindra XUV700 and Toyota Innova Hycross are beyond my budget. The Scorpio N is nice but its 3rd row is unusable.

BHPian viper33 recently shared this with other enthusiasts.

Hello TeamBHP community, hope all of you are doing great. I am just writing this fairly long post to gather your opinions.

• Financial advice
• Whether to buy a new car or continue with the Honda BR-V
• Which car to buy

I was born in a humble family (humble is a small word, but a poor family). My father was a carpenter and worked as a watchman and our monthly income was Rs.2000 per month before I started earning. I have mostly studied in Govt schools and colleges with my parents putting in as much as they can and with the help of my relatives.

Currently, I am 34 years old and I work with Microsoft as Sr.Product Manager. I earn approx 45L post-tax.

We recently bought a house worth 1.5Cr, a 3 BHK villa in Hyderabad. This is the first and only property we own right now. The primary reason to choose a villa over an apartment is that an apartment might lose value over a period of time and selling would be difficult. With a villa, the chances of appreciation are higher and the probability of selling it, in case you know life is unpredictable, is higher.

Apart from the house, approx. 20L in savings

Here is my conundrum

Currently, I am on a mission mode to close the home loan and if there are no surprises in life, I would expect it to close in the next 5 to 6 years. As I am paying high EMI with less tenure, I do not have any money for investments. As the house loan interest is cheaper, the question is whether should I rush closing the loan or continue to pay the EMI and invest the amount as the probability of fetching higher returns is higher. Please share your thoughts on your experience considering my background.

Let's come to the car

I am an auto enthusiast, and I always help my friends and family in choosing their perfect ride. I enjoy driving and I swear by it. Till now, based on my background, haven’t dared to buy a new car of my choice.

My first ride was a 10-year-old A-star which I bought for 2L and sold for 1.85L after driving it for 2 years. Then I bought a pre-owned Sunny automatic. My mother has her legs operated on and can not fold her legs completely, so I needed a car with a lot of leg room and chose Sunny. I bought it for 3L and sold it for 2.85L after driving it for 2 years.

My sister’s family is like the same family and we miss her always whenever we go anywhere, so I needed a 7 seater. Currently, I drive a pre-owned Honda BR-V. I bought it with the assumption that Honda is reliable, but my current car gives one or the other trouble now and then and spent quite a good amount in servicing that. In addition to that, the ride was so stiff, that my mother complained every day.

Now, I am planning to buy a new car and that too a 7 seater. My financial mind says to wait for 2 more years, reduce the home loan burden, and get a car, but to be honest, every time I drive my current car, I feel why am I driving this and never enjoyed it as well. Please help me with which choice to make.

Cars I am considering

Just I have three prerequisites, it should be safe, it should be fun and an automatic.

• Maruti Suzuki Ertiga: 3-star and lethargic engine, so ruling out.
• Kia Carens 1.5 Turbo: Super fun with its powerful turbo petrol engine, again a 3-star rated car, when I am spending 20L which is too huge for me, I don’t want to settle for an unsafe car.
• Mahidra Scorpio-N Z6 Automatic: Safe and Fun. But unusable 3rd row. If I pick the petrol, I don’t think I can handle the low mileage. If I pick diesel, I am not sure about the reliability/maintenance of the BS6 diesel engine, and anyway, I don’t drive enough to need a diesel.
• Mahindra XUV700: The lowest trim with 7 seats is AX5 diesel and it costs approx 26L in Hyderabad, petrol 7 seater is way beyond my budget.
• Tata Safari: Waiting for the petrol which is expected to launch in 2024, I love the design and I like the dynamics of the current car, but I want peace and I am not sure whether I get it with Safari with so many niggles reported.
• Invicto and Hycross: Invicto's lower variant is 31L on the road Hyderabad and Hycross VX is approx 32L on road, I don’t think I can spend such a big amount.

So I don’t know which one to pick either. Share your thoughts. Thanks in advance.

Here's what BHPian Raghu M had to say about the matter:

Sir, I am in my late 30s and work as a VP ops for a US-based firm. I can share some insights into the financial planning part. Allow me to be a little open with the financial part. While I cannot comment on your previous expenses (read obligations), I can see that your hurry in closing the housing loan is not exactly the right decision. I think that is a common misconception that a housing loan has to be closed early so we can have some peace of mind.

• Lower tenure of housing loans (with low interests) takes away the advantage of investing aggressively in the markets (read mutual funds, shares, real estate). Your current cash should be invested while the markets are beginning to show dominance. The next 15 years will see the Indian markets mostly on the bullish side. Your money will start compounding after 6 to 8 years and I am sure you understand the power it has.
• In case you want to upgrade to a bigger house in the future (I hope you do) it will be easy to sell the property (loan transfer is a matter of couple of days) and move on. Not that closing a loan would make it difficult but the documentation (legal opinion, valuation and EC) all take time and a lot of due diligence is needed. A property under loan is pretty safe and has protection from various risks. You are even insured while the loan is running, it gives your family great security and legal ownership of the property in case something unexpected happens.
• You have a solid 15 years from now to invest so that you can retire before 50. So, the plan should be to invest all the extra cash rather than focus on closing the loan. The loan is secure and gives you ample time to close. If I were you, I would negotiate a longer tenure with my bank. Housing loans have the lowest interest rates, hence that is always a safe bet.
• The 20L savings that you have currently should have been a bit more (my honest opinion). But since you have bought a big property, that is understandable. You should ideally be having a corpus of at least 50L given your financial standing. Your portfolio should be 60% in equity and the rest in bonds/debt or even real estate. Talking purely in terms of financial gains, gold is also not a great investment when compared to markets. They beat every other instrument in the long run.
• Your emergency fund should take care of you and your family for at least 18 months in case of a job loss or any unforeseen circumstances. Do you have that?
• The decision to go for a 7-seater while your BRV is not satisfactory is totally fine. I guess all your shortlists are awesome vehicles but be wise on the EMI. A car is a depreciating asset and a short-term loan wouldn't hurt. Any cash that you invest in it has low ROI, so try to move that to a safer investment with the additional cash you have.

This is purely from my experience and it is beginning to work slowly. I have a goal to retire by 2030 (or at least feel secure by then). Am sure you have your goals, so the above points are only for sharing insights. Good luck!

Here's what BHPian Axe77 had to say about the matter:

This rings close to my heart as the current house that I live in, I had also paid off the housing loan on a very accelerated timeline - at the expense of throttling my savings-based investments for a few years in between. Please don’t make the same mistake. In hindsight, I wish I had invested a little more in some of those years even if it had delayed my foreclosing of my loan a few years later. In balance, it would have been a financially wiser outcome.

I would say try and see if you can elongate the tenure such that your monthly EMI reduces. Let the surplus amount generated per month facilitate some periodic equity investments, which you need not touch for a long time. Please don’t underestimate the power of compounding over an 8 - 12-year period. Over this period, strike a balance between using surplus funds towards prepaying amounts of your loan to reduce the principal liability as well as towards boosting your periodic investments.

This will allow you to wind down the loan in a sensible horizon (you’re still only 34) as well as allow you to create a sizeable savings corpus.

From the list you’ve mentioned, I would suggest the Carens diesel A/T or DCT - principally because it’ll be nice to drive, has excellent ride quality thanks to its 16” wheels and has an incredibly usable third row (relatively speaking).

An even better choice might be trying to find a good used Crysta. It should be low-cost to maintain, reliable, and again very comfortable for your intended use case. I don’t think there’s any harm in going for a car now even if it means pushing out your accelerated loan amortization by a little bit. You’ve clearly been very disciplined with your savings as well as asset creation. If you are an enthusiast and you hate being in the current car, by all means, change it with something sensible that doesn’t break the bank for you.

Here's what BHPian sunilch had to say about the matter:

You have achieved quite a bit in life and I wish I was in your place. Not that I am doing bad from where we/family started, but being a human I wish I was in your situation.

Can't advise you much but do sell the BR-V if you and your family are not happy with it. I own an MT BR-V and love every bit of the car and I am surprised with your observations. But if your primary requirements are not satisfied with it, better to sell ASAP.

Regarding the Home Loan, it appears you have chosen a lesser tenure and hence a higher EMI. If that is not the case, my comments are pointless and you can ignore them. Otherwise, I suggest you change the tenure to the maximum possible/available with the least EMI possible.

Reasons are simple:

• Allows for more in-hand and hence better options to invest the surplus money
• Pre-payment is free in India and you can pre-pay the loan partly every few months with your surplus savings. When you pre-pay, opt for tenure reduction at that time. Each time you pre-pay, your tenure will go down substantially during the initial years. Do this for the first 3-5 years of your loan tenure. Once your outstanding balance reaches are comfortable level, leave the Home loan as is to enjoy the lower borrowing cost and tax benefits. Not many benefits are available these days anyway.
• Extra money in hand is helpful always and can be put to best use based on available opportunities.

Get a car (pre-owned or new based on your preference) that is comfortable for the family. Appears that you want to keep One family car and not multiple. In that case whatever your family enjoys more than you. From personal experience, lesser-known brands may offer a wonderful product and experience. So TD every 7-seater out there and then pick what your family loves overall.

Check if a used Petrol Innova Crysta is available in the used market in HYD. It may have low FE, but would be a good comfortable and safe car for sure.

Check out BHPian comments for more insights and information.