A car is one of the few big purchases that gets cheaper every year you own it, while a car loan keeps charging interest. Paying cash is usually the cheaper way to own a car. It just needs a plan that starts before you need the car.
Step 1: Put a number and a date on it
Decide the car and the year you want it. Then account for prices rising: a car that costs ₹8 lakh today will cost more in four years. Our goal planner does this for you.
Step 2: Work out the monthly amount
The goal planner shows the monthly saving needed, at the return you assume. Be conservative with that assumption.
Step 3: Match where you save to how soon you need it
For goals only a year or two away, many people prefer steadier options such as recurring deposits, because markets can fall just before you need the money. For longer goals, some people use SIPs in mutual funds. Which suits you depends on your situation; a SEBI-registered adviser can help you decide.
Step 4: Automate it
Set the saving to go out on salary day, before you can spend it.
The cheapest car loan is the one you never take.