Hi Manish,
I have made a comparison of taking car loan, making cash payment or taking loan on FD. Out of this FD on loan comes out to be best.
1. Loan of Rs. 5 lacs for 5 years at 11% reducing interest
Amount paid extra as interest in 5 years will be 146348,
2. FD for 5 years at 9% interest
Amount received with interest at maturity will be approx. 280255 yielding 11% return. Now lets deduct 30% tax from this amount = 196178.
3. Loan on FD at 9.5 % SBI- Total EMI int paid=1,25,107
Hence overall gain will be 196178-125107=71071. Which can be used for your fuel expenses for 5 years.
Also you don’t have to be involved in hypothecation and other hassles of loan. Please suggest your comments on my analysis.
Regards
Saurabh