A Rupee today is more than a Rupee tomorrow, I believe this since I was less than 10. How true it is, lets find out.
Picture this, you intend to buy a laptop for 50k. Since you had cash you thought its always better to pay in cash otherwise one has to pay interest which would be overhead. I must say its time to change this mindset because The Times They Are a-Changin’
Let numbers do all the talking. There are various financial institutions like Bajaj Finance and Citi Finance which are dying to give money on credit. Rate of interest they charge is 4.5 and 4.75 percent per annum and of course processing fees which lies between 2.5 to 3% ( one time).
Now, if you want it to get financed for 2 years (yeah that s possible, they do it for 3 years also) you effectively pay rate of interest between 6-7%. If you are still with me 🙂 let me load you with one more information. These days fixed deposit in an bank for one year will fetch you close to 9.5% interest!! If you want to move a step ahead (15-20 %) mutual fund is obvious choice. Yeah, if you deal with stock market, you should not be reading this blog :P.
What this effectively means is that if you pay by cash you incur a loss of 3k to 15k for a stuff which is of order 50k in two years!!
Does this make sense? 🙂
P.S. I do not work with Bajaj Finance or Citi Finance 🙂