A common question which is asked to me by many friends, and I think almost all new carrier starter have this question in mind “which loan I should take first – home loan or car loan?” I think the decision is dependent on need of individual and it can vary as per the following factors.
Job type- Government / private job:
Government Employee: the person doing government job has different facilities and staff quarter is one out of those. Government employees are frequently getting transferred from one place to another place, hence difficult to stay in the owned home. For such a government servant home loan can be at second priority and car loan can be a first priority.
Private Sector Employee: In contrast to above, private sector jobs are generally steady, within the same city; hence you can stay in your owned house, actually utilize all the facilities and enjoy the piece. For such private sector employees, home loan is first priority.
Not Married: If you are bachelor and not planning to get married for 4-5 years, staying with your friends, not spending much amount for rent in shared flat, then might be car loan is your priority.
Married: if you are married, staying with 3-4 family members and spending a big amount as a house rent, you will prefer to take home loan first.
Earning potential and financial status:
Middle class: If you are from middle class background, without any financial backup from anyone and with the monthly income in the range of 30,000/-, it is difficult to bear a big home loan emi, instead of it you can bear small car loan emi for 2-3 years. After 2-3 years, once you clear the car loan, your monthly income would be definitely increased up to approx 45,000 to 60,000 per month. That time would be better to go for home loan.
Upper class/ Upper middle class: If you are form upper middle class or upper class financial background, you don’t have to worry about the car loan. You can buy a car in cash and if required think to avail home loan, which will help to save income tax as well.
Generally for a big home loan more than 35 lac, the tenure goes from 15 to 30 Years, hence it’s advisable to consider your current age to take this decision.
If you are in 21 years to 27 years age bracket, your first priority can be car loan, but if you are 27+ year old, you should first think about the home loan.
Family choice/ medical need
If you have some medical emergencies at home like, somebody has to visit the hospital frequently, or if your wife or sister is pregnant and hospital is far from you house etc, in this case your first priority should be car loan instead of housing loan
The distance of working location from your current residence
If you are working so far from your house and you don’t have any convenient option to travel, in that case you have to travel by car and have to take car loan first.