Best car loan interest rate: At present getting your dream car has become very convenient and easy, as we can simply opt for loans from banks that eliminates the burden of having cash in hand. However, everything that looks good fine does not come comfortably because loan that you take comes with a price.
The banks give you a loan but get a chunk from you in the form of interest, therefore, purchasing a car with cash actually sounds like a good plan.
According to BankBazaar, "Of course, using cash is the best way forward most of the times. But at present, with loan rates falling, a Car Loan can actually help, especially if you are self-employed. Even if you are salaried, you can turn it to your advantage."
Let's understand which medium is best for purchasing a car, as per BankBazaar, which explains three scenario for financing the car.
For instance, if a salaried employee has received a hefty bonus of Rs 7.5 lakh.
CASE 1: Salaried and investing in Fixed Deposits
In case an individual opt for car loan, he or she would have to make a 20% down-payment and will get a loan for only 80% of the car’s value. The loan amount will have a tenure of three years at an annual interest rate of 12% and EMI will come to Rs. 19,010 every month.
If the individual makes 20% down payment, he or she is left with Rs 6 lakhs, which can be invested in some other medium.
The report says, "Assuming that Mohan earns a post-tax return of 10% per annum on this investment of Rs. 6 lakhs, this amount would have grown to Rs. 8,06,934 in 3 years’ time."
It can be said that an individual receives higher cash outflow than inflow over 3 years if he opts for a Car Loan and invests in a Fixed Deposit.
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