Prepay Car Loan or invest for kid education ?

POSTED BY Krishna ON February 18, 2014 8:44 pm COMMENTS (10)

Hi,

I recently availed car loan of 2 lakhs from SBH, EMI will start from next month, I have a surplus of 90k with me , I am confused should I invest this for my kid education purpose or pay off my debt, please help me.

Regards,

Krishna

 

10 replies on this article “Prepay Car Loan or invest for kid education ?”

  1. ashalanshu says:

    Dear Krishna, if you are confident about this fund’s future performance, invest.

    Thanks

    Ashal

  2. Krishna says:

    Hi,

    Thanks Ashal for the suggestion , will do the same.

    Regards,
    Krishna

    1. Krishna says:

      Hi Ashal,

      How about ICICI Prudential Focussed Blue Chip Fund it is giving good returns in last 5 years.

      Krishna

  3. ashalanshu says:

    Dear Krishna, Please put all the amount into HDFC Top 200 or Franklin India Bluechip fund.

    Thanks

    Ashal

  4. Krishna says:

    Ok, Thanks Ashal, in that case can I opt for HDFC top 200 or HDFC Prudence,or anyother MF that can be considered ?.

    Thanks,
    Krishna

  5. ashalanshu says:

    Dear Krishna, please do not prepay your Car loan. Please use the amount to invest the way you are saying. After 5Y, your net return from Eq. and PPF ‘ll be better than the interest paid by you in all these 5Y.

    There is one more thing. When retail inflation is running @ 10+%, it’s sensible to continue your loan as net payment from you towards your loan is not very much due to impact of inflation.

    Thanks

    Ashal

  6. Krishna says:

    Hi Ashal,

    I am planning to invest this through mutual funds and PPF combined in 85:15 ratio.
    Also My loan tenure is 5 yrs and emi is around 4500 per month.

    Regards,
    Krishna

  7. roshan says:

    why not use 50% of the fund to prepay your car loan and 50% of the fund to invest in your kids’ education?

  8. Credexpert says:

    Dear Krishna,

    Paying off debt is advisable since one saves on the interest outgo by doing the same.

    In your case, you would have to understand if investing for your child’s education is a priority or repaying the auto loan. Also, the surplus of Rs. 90,000 could be utilized for generating income from mutual funds/fixed deposits etc. Evaluate these options before taking the next step of action.

    Regards,
    Credexpert
    http://www.credexpert.in

  9. ashalanshu says:

    Dear Krishna, if you opt to invest for your kid’s education, where w’d you invest from your own choice?

    Thanks

    Ashal

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