On Tuesday 01 May 2007 12:06 am, Srini Ramakrishnan wrote: > but one statistic I > heard yesterday of 9 out of 10 car buyers taking out a loan to finance > their purchase strikes me as about right.
Loans for cars make eminent sense for many reasons. A whole lot of people who run businesses (such as I do) get tax benefits from taking a car loan. My gross annual income is reduced by the amount of depreciation of the car, and my tax liability is reduced by the amount on interest I have paid on the loan. Besides, if I pay a lump sum on purchase of the car, I have to show exactly where and how I had that lump sum stashed up (which is a problem for some people, though not me :) ). In additiion, even if I had a lump sum to throw on a car, I would be better off investing it appropriately to recoup some of the loan interest losses, while I recouped more of the losses via tax advantages that I have mentioned above. However what I find amazing is the candour with which automobile financiers advertise cars with "low" estimated monthly instalments of Rs 20,000. For 20,000 Rupees a month you can get a driver, two domestic helps, an ayah for your kid and a watchman/gardener and still have money left over for monthly instalments on a less expensive non imported car from a fully depreciated Indian company. shiv
