[hserus]

Originally Posted by pedrolourenco

I have a question about making payments for used cars. Since I'm inspired by the most popular Pre-Worshipped car thread these days, I was planning to pick up a similar car. Now my question is about transferring money to the seller. I can't carry cash to pay and take the car. I'll have to do an electronic transfer. How to ensure the seller doesn't take the money and then start acting funny.

Why don't you give him a cheque or DD if that is a concern?

ps: Several sellers of used cars prefer to take nothing other than cash for the transaction. Easier than accounting for it to the taxman etc etc (though transfer of registration involves producing PAN cards so that's a waste of time really ..)

[pedrolourenco]

Originally Posted by hserus

Why don't you give him a cheque or DD if that is a concern?

I doubt that anyone will accept a cheque. DD maybe. Usually if not cash people like NEFT. No one will sign and handover the papers and the car until they get the notification of funds transferred. However once I transfer the funds I have to hope that the seller is honest enough to hand over the car and papers without any problems. I'm talking 25-30 L here which for me at least is a huge amount of money and I just want to be sure.

ps: Several sellers of used cars prefer to take nothing other than cash for the transaction. Easier than accounting for it to the taxman etc etc (though transfer of registration involves producing PAN cards so that's a waste of time really ..)

Works fine for businessmen who have hard cash or people with black money. I'm a salaried person and all my earnings come through the bank. Part of the amount I will be paying will be from a loan (not car loan).

[drsingh]

Originally Posted by pedrolourenco

I doubt that anyone will accept a cheque. DD maybe. Usually if not cash people like NEFT. No one will sign and handover the papers and the car until they get the notification of funds transferred. However once I transfer the funds I have to hope that the seller is honest enough to hand over the car and papers without any problems. I'm talking 25-30 L here which for me at least is a huge amount of money and I just want to be sure.

Works fine for businessmen who have hard cash or people with black money. I'm a salaried person and all my earnings come through the bank. Part of the amount I will be paying will be from a loan (not car loan).

Well...... If you're looking to buy cars in the A, B, C segments, it'll work out better if you take advantage of your creditworthiness and get a new car. And invest your cash in equity. Over a 7 year period, you'll easily break even/come out ahead. And in addition you get to drive a new car.

Used car purchases make more sense in higher segments. Unless you plan to get a used vehicle and overhaul it fully.

This way you can also get more money down the years for an upgrade by selling your newer car.

[hserus]

If he is paying 30 lakh used he's probably looking at a higher end merc / audi / bmw. Buying new one segment lower (fortuner, honda cr-v, bmw 1 series, merc a class, camry etc) might actually make sense.

Also - give him a DD, that is as good as money in the bank.

[pedrolourenco]

Originally Posted by drsingh

Well...... If you're looking to buy cars in the A, B, C segments, it'll work out better if you take advantage of your creditworthiness and get a new car. And invest your cash in equity. Over a 7 year period, you'll easily break even/come out ahead. And in addition you get to drive a new car.

Finance and Economics is not something I have studied. What you just said has gone flying straight over my head. Can you explain in simpler terms please.

Used car purchases make more sense in higher segments.

This I understand from various threads here. The car is question is a BMW 5 series.

Unless you plan to get a used vehicle and overhaul it fully.

Have done this too. I bought back my first car and restored it fully. Did not make sense economically. Just did it for the passion.

[drsingh]

Originally Posted by pedrolourenco

Finance and Economics is not something I have studied. What you just said has gone flying straight over my head. Can you explain in simpler terms please.


This I understand from various threads here. The car is question is a BMW 5 series.


Have done this too. I bought back my first car and restored it fully. Did not make sense economically. Just did it for the passion.

Okay.I'm going to break it down :

The Facts:

1.New Car loans are almost as cheap as A Home Loan. (cheapest loans available for most salaried people).Used car loans are very expensive.
2.If you're eligible (CIBIL Score,Past track record,Salary slips,ITO returns etc.),the bank will give you a 7 year loan for upto 85% of your new car price.
3.Long term returns by Index fund investments in the Indian market=17% not including the dividends.TAX FREE
4.Private Portfolio Managers have given 20% plus returns after fees over past 10 years(reliable data has been available for the past 10 years).They take clients with minimum 25 lakhs commitment.

The Assumptions:
1.You have 25-30 lakhs in the bank.
2.You are able to invest the money at a reasonable 18% over 10 years.
(Average assumption-The present market correction provides a good window to get in)
3.You are eligible for a 7 year loan at about 10.3 % floating rate.This will go down over the next 3-4 years and your EMI will reduce proportionally.

The Strategy:

1.Invest 25 lakhs @18% instead of using it to buy a used car.
2.Take a 50 lakh loan for a Brand New AUDI
3.You will pay a total of 1 crore over a period of 7.2 years to the bank.
4.At 18 percent return (reasonable average) your 25 lakhs becomes 1crore at the end of 8 years or 2 crore at the end of 12 years.
5.The resale value of a new car single owner at the end of 7 years adds to the financial return.

The Benefits:

1.New Car!
2.No worries about History of car etc.
3.Better resale at the end of 7 years.(Adds to the total return on 25 lakhs)



P.S. if you have a Home loan with SBI.they have a used car loan loyalty scheme where you can get a used car loan for 11.5 % (If your property value is in excess of your remaining mortgage payments)

[pedrolourenco]

Originally Posted by drsingh

Okay.I'm going to break it down :

Thanks for the detailed explanation.

1.New Car loans are almost as cheap as A Home Loan. (cheapest loans available for most salaried people).Used car loans are very expensive.

1.You have 25-30 lakhs in the bank.

I was earlier planning to partially prepay a reasonable sum of this loan. However going by your explanation I should keep that loan running as it is and use the extra cash for the used car. So effectively I'm getting a used car loan for new car rate of interest.

2.You are able to invest the money at a reasonable 18% over 10 years.
(Average assumption-The present market correction provides a good window to get in)
3.You are eligible for a 7 year loan at about 10.3 % floating rate.This will go down over the next 3-4 years and your EMI will reduce proportionally.

The Strategy:

1.Invest 25 lakhs @18% instead of using it to buy a used car.

Makes a lot of sense. However..

2.Take a 50 lakh loan for a Brand New AUDI

There are 2 problems here:
1. I don't want an Audi (I presume you are referring to the A6).
2. I don't want to spend 50 L on a new car.
I'd rather spend 25-30 L on a 520 D or 525 D and take advantage of the Pre-Worshipped formula.

3.You will pay a total of 1 crore over a period of 7.2 years to the bank.
4.At 18 percent return (reasonable average) your 25 lakhs becomes 1crore at the end of 8 years or 2 crore at the end of 12 years.
5.The resale value of a new car single owner at the end of 7 years adds to the financial return.

However I will consider this option if I don't find a good 5 Series. I which case I will pick up a new 320D. They are currently offering it at 39 L OTR.

The Benefits:
1.New Car!
2.No worries about History of car etc.
3.Better resale at the end of 7 years.(Adds to the total return on 25 lakhs)

True

P.S. if you have a Home loan with SBI.they have a used car loan loyalty scheme where you can get a used car loan for 11.5 % (If your property value is in excess of your remaining mortgage payments)

I need to check with Corporation Bank if they have something like that as my loan is with Corporation Bank.

[Lobogris]

Originally Posted by drsingh

Okay.I'm going to break it down :

The Facts:

1.New Car loans are almost as cheap as A Home Loan. (cheapest loans available for most salaried people).Used car loans are very expensive.
2.If you're eligible (CIBIL Score,Past track record,Salary slips,ITO returns etc.),the bank will give you a 7 year loan for upto 85% of your new car price.
3.Long term returns by Index fund investments in the Indian market=17% not including the dividends.TAX FREE
4.Private Portfolio Managers have given 20% plus returns after fees over past 10 years(reliable data has been available for the past 10 years).They take clients with minimum 25 lakhs commitment.

The Assumptions:
1.You have 25-30 lakhs in the bank.
2.You are able to invest the money at a reasonable 18% over 10 years.
(Average assumption-The present market correction provides a good window to get in)
3.You are eligible for a 7 year loan at about 10.3 % floating rate.This will go down over the next 3-4 years and your EMI will reduce proportionally.

The Strategy:

1.Invest 25 lakhs @18% instead of using it to buy a used car.
2.Take a 50 lakh loan for a Brand New AUDI
3.You will pay a total of 1 crore over a period of 7.2 years to the bank.
4.At 18 percent return (reasonable average) your 25 lakhs becomes 1crore at the end of 8 years or 2 crore at the end of 12 years.
5.The resale value of a new car single owner at the end of 7 years adds to the financial return.

The Benefits:

1.New Car!
2.No worries about History of car etc.
3.Better resale at the end of 7 years.(Adds to the total return on 25 lakhs)



P.S. if you have a Home loan with SBI.they have a used car loan loyalty scheme where you can get a used car loan for 11.5 % (If your property value is in excess of your remaining mortgage payments)

With respect, this does not seem like prudent financial advice. No mutual fund guarantees a return of 18%. In fact in several years one suffers negative returns. One can lose up to 50% of the portfolio during downturns and it can take years to recover even the invested value in such cases. If such easy returns were possible, the banks would invest in them rather than make 10% on home loans and mortgages.

Instead on paying 25 lakhs, OP would end up paying over 1 crore for the car. What if the 25 lakh only doubles in 7 years? What if there is a bear market after 6 years and his investment is even less than the amount invested? Stock market is a great investment avenue but it should be limited to excess savings and should not be used to hedge such bets.

[drsingh]

Originally Posted by Lobogris

With respect, this does not seem like prudent financial advice. No mutual fund guarantees a return of 18%. In fact in several years one suffers negative returns. One can lose up to 50% of the portfolio during downturns and it can take years to recover even the invested value in such cases. If such easy returns were possible, the banks would invest in them rather than make 10% on home loans and mortgages.

Instead on paying 25 lakhs, OP would end up paying over 1 crore for the car. What if the 25 lakh only doubles in 7 years? What if there is a bear market after 6 years and his investment is even less than the amount invested? Stock market is a great investment avenue but it should be limited to excess savings and should not be used to hedge such bets.

I have taken a reasonably long period (10 years).And the 17% figure is the Index and not some mutual fund.

This is one way of going about it.Money can be put to use in any way (Equity,Real Estate,Business,Loan to a friend).The idea is to earn about 18% return over the long term.

You need to study more about the Banking system and the historical return on assets.

If you study any 10 year period,Mutual fund returns have beaten Provident Fund returns.(which max out at 12%)

This is advice for people who have a stable source of Income and will not rush to withdraw funds from equity in a panic.

I've been through the crash of 2008 and lost 40% of my meager portfolio at the time.The Index then went down to 8k and it reached 30k this year.Almost up four fold in 7 years from its lows.

Index fund investing is as safe and low cost as it gets in Equity Investments.

This is a strategy to buy a new car instead of an old car at 50% of cost.But the same strategy of earning more on your money than your loan interest will work every time.Its just Mathematics.

Prudence and professional advice is a must if you don't know your way around the investment world.But SIP in an Index Fund is the safest way I know to invest in Equity with average returns for the maximum people.

The New car loan is available to creditworthy and eligible tax paying citizens and they should take full advantage of it.

In a nutshell: If you're smart enough to make 17-18 % on your Investments over the long term,It pays to take a car loan every time.More so if you're Self Employed/Own a business,Then you can expense it and claim tax savings and depreciation too.

[dsnaveen21]

Purchased Wagon R for 1.70 lakhs.

[vin11]

Originally Posted by dsnaveen21

Purchased Wagon R for 1.70 lakhs.

Congratulations on the new (used) car! Can you post some pictures of the car, or better still, an ownership review?

For a 50k run 2008 WagonR, 1.7 Lac is the right price to be paid assuming that there are no major upcoming repair works / maintenance costs (tyres, suspension, etc.). A 50k km run Maruti car at a fraction of the price provides a great deal for newbie drivers out there. Firstly you won't drive much (I assume less than 1k per month) and secondly they are reliable enough (while also being easy to drive and navigate in and around town).

[dsnaveen21]

Originally Posted by vin11

Congratulations on the new (used) car!

Thanks, I haven't taken the from owner yet, I was supposed to take it y'day, wife said yday was not a good day, and from today he is out for 3 days, may be Friday I will get it, will give for full service, and then upload pics.

[hserus]

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[kaustubhpatil]

Guys, 17% CAGR returns it's more of wishful thinking then a reality. IMHO. A realistic number worked be around 11-14%. And I'm taking equity.

[mail4ajo]

I am planning to pick up an i10 AT for my spouse. The car is low mileage, 27K odd kms. What should I look out for while buying i10 and AT in general. How to check for gearbox performance and condition?