Buy Now vs Save First

Should you take a loan now or save up first? Enter the numbers — the calculator does the rest.

Purchase Amount (₹)Price of what you want to buy today

Loan Interest Rate (% per year)Interest rate your bank charges

Loan Period (months)How many months to repay

Expected Savings Return (% per year)Return you'd earn saving instead (FD, mutual fund, etc.)

Expected Inflation (% per year)How much prices rise per year (India avg ~6–7%)

Monthly EMI₹20,276.39

Total You Pay₹12,16,583.40

Interest Cost₹2,16,583.40

Future Price (inflation)₹13,38,225.58

Savings Corpus (SIP)₹14,60,113.53

Your Advantage₹245.77

Cost Comparison — lower is better

Total paid if you take a loan₹12,16,583.40 ✓

Future price of item (with inflation)₹13,38,225.58

Savings Corpus vs Future Price

SIP corpus you'd build₹14,60,113.53

Future price you'd need to pay₹13,38,225.58 ✓

💡 In Simple Words

❌ Path A — Take a Loan Now

You get the item today at today's price
Pay ₹20,276.39/month for 60 months
Total out of pocket: ₹12,16,583.40
Interest paid to bank: ₹2,16,583.40

✅ Path B — Save First

Save ₹20,276.39/month (same amount) for 60 months
Your money grows to ₹14,60,113.53
But the item will cost ₹13,38,225.58 by then (inflation)
You can afford it and have ₹1,21,887.95 left over ✓

Saving is better because your SIP corpus (₹14,60,113.53) beats the future price (₹13,38,225.58).

🧮 The Math Behind It

EMI formula: EMI = P × r × (1+r)ⁿ / ((1+r)ⁿ − 1), where r = 8%/12 = 0.6667% per month, n = 60 months. Result: ₹20,276.39/month.

Total debt outflow: ₹20,276.39 × 60 = ₹12,16,583.40. Interest paid = ₹12,16,583.40 − ₹10,00,000.00 = ₹2,16,583.40.

Inflation-adjusted future price: ₹10,00,000.00 × (1 + 6%)^5 = ₹13,38,225.58.

SIP corpus (annuity-due): ₹20,276.39/month at 7% p.a. for 60 months = ₹14,60,113.53. Formula: PMT × ((1+r)ⁿ − 1)/r × (1+r), r = 7%/12.

Decision rule: Compare ₹12,16,583.40 (debt cost) vs ₹13,38,225.58 (future price). Future price is lower than debt cost — but check if SIP corpus (₹14,60,113.53) covers it.

📊 For Finance Professionals

Opportunity cost: Capital locked in EMIs cannot compound. This model assumes the alternative is a pure SIP at the same EMI amount — real opportunity cost depends on your actual investment options and tax treatment.
Tax shield (home loans): Section 80C (principal up to ₹1.5L) and Section 24(b) (interest up to ₹2L) deductions are not modelled. These can make debt significantly cheaper in real terms for home loans.
Inflation asymmetry: Consumer goods may inflate differently from CPI. Real estate and gold typically outpace CPI; electronics typically deflate. The single inflation rate is a blunt instrument.
SIP model: Annuity-due (start-of-period) with monthly compounding. Does not model ELSS lock-in, exit loads, expense ratios, or market volatility. Equity returns are stochastic; the rate here is a deterministic assumption.
Prepayment option: Loans can be partially prepaid, reducing effective interest cost. This model assumes a vanilla EMI loan with no prepayment — use the Part Payment Calculator for that scenario.
Liquidity premium: The model does not price the option value of liquidity. Saving first keeps cash accessible; once EMIs start, the capital is committed.

🏦 See Full EMI Schedule →📈 See Full SIP Schedule →

This is a simplified model for education only. Actual returns, EMI terms, and inflation vary. Please consult a qualified financial advisor before making major financial decisions.