Two Weeler Loan or Cash Payment ?

POSTED BY Vivek Soni ON October 26, 2012 4:51 pm COMMENTS (3)

Hello guys,

i am planning to buy a bike in next few days . I have two options , either to buy with cash payment or go for a two wheeler loan at 11% interest . Loan amount would be around 1.1 lac , with down payment of 40K . I have around 2 lac Rs in my savings account . And i dont forsee any more spending in near future .

My question is should i buy with cash or go for a loan ? It would be great if you guys can help me out 

Regards,

Vivek Soni

3 replies on this article “Two Weeler Loan or Cash Payment ?”

  1. Dear Vivek, if I were in your place, I w’d have kept my money in Bank FD, avail OD in it & then pay for bike from this OD. the interest ‘ll be less than the auto loan & being OD, you can continue to use this in future.

    An Offbeat question – do you really need that 1.1L bike which may go to become junk in your back yard after few years?

    Thanks

    Ashal

  2. Vivek Soni says:

    Thanks Manish for a quick reply .

    Regarding point one , its a very good perspective to look at things . In Short , if i go for cash payment , i will save interest + depreciation value .

    for point two , I have a credit card and have always made payments in time . So CIBIL score wont be that bad .

    So i have finally decided to go for Cash Payment 🙂

    Thanks for your help Manish !

  3. Vivek

    There are 2 things I would like to highlight here . then you can take the decision

    1. Generally, its not encouraged that you take a loan for consumption purpose, which leads to a pusrchase which is not appreciating in value, bike over time will be a depreciating asset, so from a good habit point of view its not encouraged, especially when you have the money in your pocket.

    2. Now coming to the new trends in India, you must have heard about CIBIL and credit report and score. If you already dont have any kind of loan or credit card, this is kind of a small opportunity to build up your credit history . You can take the loan for 2-3 yrs tenure and then keep repaying on time (make sure you are very punctual in that) , over the next 2-3 yrs , you should build a nice credit score due to this. Being a short term loan, the interest component will be smaller .

    Manish

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