A SIP can recover your car loan interest! But Kaise?

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A SIP can recover your car loan interest! But Kaise?

February 11,2023

In today's world, cars have become a necessity. And to some, they hold aspirational value. Whatever your reason to own one may be, one of the things that pinches us is the interest we pay on our car loan.

So, what's the best way to buy your dream car? Start a SIP at the same time you start paying for your car EMI! Still not convinced? Read on to see how a SIP can help you recover the interest paid on your car loan.

EMI WITHOUT SIP		EMI WITH SIP
COST OF CAR	₹ 10,00,000	COST OF CAR	₹ 10,00,000
DOWN PAYMENT (10%)	₹ 1,00,000	DOWN PAYMENT (10%)	₹ 1,00,000
CAR LOAN AMOUNT	₹ 9,00,000	MONTHLY SIP AMT 1% OF LOAN	₹ 9,000
LOAN INTREST RATE	9%	TOTAL SIP INVESTMENT IN 7 YEAR	₹ 7,56,000
LOAN TENURE	7	ASSUMED RETURN ON INVESTMENT	12%
EMI / Month	₹ 14,480	INVESTMENT VALUE	₹ 11,48,316
TOTAL INTREST PAID	₹ 3,16,334	GAIN FROM INVESTMENT	₹ 3,92,316

It’s easy to see that the gain from your SIP investments is now able to recover the total interest amount you have paid for your car loan.

Systematic Investment Plans (SIP) can not only help you buy a car but can also help you recover the interest you pay on your car loans. As every borrower strives to pay their monthly EMIs on time, if you instil the same discipline by investing just 1% of the car loan amount in monthly SIPs, the gains from your investment will recover the entire car loan interest cost.

Mutual Funds have the power to bridge the gap between your reality and aspirations with the Power of Compounding. Be it your dream car or your dream house getting to the destination in a smart way is the key.

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