Advice for Car Loan repayment

POSTED BY Vishal Raisinghani ON February 17, 2012 6:38 pm COMMENTS (3)

Hi All,

Looking for an honest advice as I am in a consfused state to continue / pay the loan .

I have a car loan of 2Lacs started in Oct 2011.The outstanding is 180,000 approx.The interest rate is 11.25% floating.Tenure is 3 yrs.
I now have 140,000 available to me and its automatically got into a FB through Sweep in feature fetching me 9.25% for a year.
Other liquid savings include around 35,ooo in other bank accounts.My monthly take home is around 50,000 with monthly expenses of approx 30,000-35,000. I am married and have my wife, and parents as dependents .

Should I continue this loan or do a part payment with my savings? Please advice.

3 replies on this article “Advice for Car Loan repayment”

  1. BanyanFA says:

    Vishal,
    High cost loans – should never be taken in the first place, and if taken repaid asap.

    Just first check out what is the prepayment penalty. If none, then repay it one go.

    Regards
    BFA

  2. You are paying 11.25+% on one side and earning 9.25% on the other side (which will be taxed at 30%==> Net return is 6.48%). Hence it is advisable to close the car loan asap.

    In general it is recommended to close all high cost loans before investing!

  3. Abhishek says:

    Please go ahead and close the loan. Once that is done.. Keep an emergency fund for your parents and start SIPs with the savings u have after expenses.

    All the best !

    Rgds
    Abhishek

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