Buying a new car is the second biggest financial decision after buying a house. In such a situation, financial planning is necessary for this. Buying a car requires a large sum of money at once. In such a situation, people must take bank loans to buy a new car. However, if little planning is done, a new car can be purchased without a bank loan.
There Will Be No Hassle Of EMI
There are two benefits of financial planning, i.e. saving money and buying a car. Firstly, the expenses will be reduced, and secondly, there will be no hassle of EMI. How long you can wait for the car is important because this will determine the investment period. The longer you wait to buy a car, your investment will grow.
Cost Will Increase In 5 Years
Suppose the car you are considering buying is priced at Rs 7 lakh today. After 5 years, its value will be more than Rs 10 lakh. If you want to buy the same car after 5 years, you must arrange more than Rs 10 lakh without a loan. Since the timeline is 5 years, it would not be right to invest in equity mutual funds because fluctuations are possible in equity mutual funds in the medium term. In such a situation, you have to invest in a place with fewer fluctuations, and you can get returns that beat inflation, i.e. 7-8 per cent.
Funds will Be Prepared Through SIP
According to the SIP calculator, with an expected return of 8 per cent, your SIP amount for the next 5 years should be Rs 14,018, while with a return of 10 per cent, the SIP amount should be Rs 13,301. Returns in mutual funds can fluctuate depending on the market.
In such a situation, keep an eye on the investment goal so that the SIP amount or fund can be changed in case of a shortfall. 5 years is a long period. You may want to increase your budget. In this situation, there will be a need to increase SIP as the budget increases.
You Will Get A Double Benefit
By buying a car in this way, you can save a good amount of money. Upon taking out any loan from the bank, the customer also pays interest on the principal amount, which is included in the EMI. By raising money through SIP instead of paying EMI to the bank, you will save interest money and earn returns on SIP. This means you can get double benefit by postponing the decision for a few years.
