If you’re borrowing money to buy a car, chances are you are going to have to put down a down payment. Traditionally, there have been lots of cited reasons to make a larger down payment so that your loan EMIs finish quickly, but that’s also created a lot of stress for a lot of people. But now, with Quiklyz - the new kid on the block, you can own a car without any down payment at all 😉
What exactly is a down payment?
When you take a loan, you need to make a down payment on the asset, because financer does not fund the entire cost of the car. Making a down payment also has apparent advantages from a borrower’s point of view. A down payment reduces the overall amount of the loan, which in turn reduces the interest burden on the borrower. By reducing the car loan amount, a down payment also makes it easier for the borrower to pay the loan back over a shorter tenure, thus keeping the customer in debt for a lesser time. 🕔
When are down payments a problem? 🤔
The issue with down payments is that they burn a hole in the borrower’s pocket. Down payments force people to dip into their savings, or sometimes, spend all of them. For some, paying a large amount upfront can be incredibly inconvenient. And even if it is, a down payment comes with opportunity costs. If you didn’t have to make one, that amount could be invested elsewhere to generate some extra cash.
Let’s assume you want to buy a hatchback. You decide to take a 3-year car loan for the complete value of the car. If the car is priced at INR 7,00,000, a 15% down payment will work out to INR 1,05,000. If you had the option of owning the car without making this car down payment, your savings of INR 1,05,000 could be invested in a fixed deposit, mutual fund, retail shares, or maybe even gold. Let’s assume you invest the amount for a period of 3 years; this is the additional income you stand to earn:
| Average Assumed Annual Rate of Return | Additional Compounded Income Earned at the end of 3 Years |
| | |
| | |
Retail Shares (Large Cap) | | |
| | |
Up until now, it was impossible to own a car by not making a car down payment. With a car subscription on Quiklyz, things just got a whole lot easier.
What’s the alternative?
Car subscription is a financing model wherein the lessor (financier) calculates the difference between the purchase value and assumed resale value of a car at end of tenure and charges you that difference (and a few other costs), split over your chosen tenure. As such, you are only paying for the value that you will utilise. This model does away with the very idea of a down payment and paying for the entire life of the car. By subscribing to a car, you get to own the car while still being asset-light. Your savings, untouched as they are, can be deployed elsewhere. A further benefit is the flexibility of returning the car. With a car bought on a loan, you have to keep the car until the loan is paid off and then deal with price uncertainties on selling the car. But with a car subscription on Quiklyz, you can return it at the end of your tenure, extend your subscription or if you loved the car a little too much, you can buy it too! ✨🚗
Done with down payments?
Down payments are marketed as ways to reduce the interest burden of a loan or cut short its tenure, but their opportunity cost is usually left out of these conversations. Subscribing to a car on Quiklyz allows you to own a car, for a tenure of your choosing and without the financial burden of an upfront down payment.
Now you know why we call car subscription the smartest way to own a car. 💙😉
