How To Revenue From Automotive Mortgage: FD-Backed Technique Works?

Automotive Mortgage Revenue Calculator

Introduction

I noticed this video introduced which is providing a novel technique to revenue from automobile loans. Initially once I noticed this video, I used to be very sceptical of what’s being mentioned. I’ve two apprehensions.

• My first apprehension is concerning the math behind calculation described within the video. So I although to do the calculations myself and verify if making the most of a automobile mortgage is feasible or not. I’ll current it to you what I discovered from my calculation (soar right here to learn it first).
• My second apprehension was associated to money circulate administration. I’ll elaborate this as properly in my put up (soar right here to learn it first). This level is so dominating over the my earlier apprehension that, majority center class folks might by no means use the logic introduced within the video.

So, what’s my conclusion concerning the thought of the video? Is it a click on bait? Principally sure, however it additionally highlights an essential monetary idea. I’ll speak about it on this put up (soar right here to learn it now).

What’s In The Video?

The visitor speaker outlines a technique the place he secured a private mortgage backed by a set deposit (FD). This FD was a Senior Residents FD, which usually gives a better rate of interest than different sort of fastened deposits.

This monetary “hack” demonstrates how one would possibly revenue from a automobile mortgage.

It may be accomplished by strategically leveraging totally different rates of interest. How?

The core thought entails taking a private mortgage in opposition to a fastened deposit (FD), moderately than a typical automobile mortgage, to safe a considerably decrease rate of interest.

For instance,

• As an alternative of paying 14-16% curiosity on a used automobile mortgage, one may get an FD-backed mortgage at 8.5%.
• The FD itself will earn a better return.
• What’s the end result? There shall be extra money gained from the FD curiosity than the curiosity paid on the mortgage.

Moreover, the speaker suggests one other hack.

He says, after constructing credit score rating and revenue, one can additional cut back rates of interest by transferring the mortgage to a different financial institution. If the opposite financial institution gives decrease charges, the price of borrowing will additional come down.

On the face of it, the entire course of seems to be like a dream, however in actuality it isn’t.

However I have to give at the least give this to the speaker that, via his video, we’ll get to know the advantages of an idea referred to as “decreasing steadiness methodology” utilized in financial institution loans. If you wish to know the way decreasing steadiness mortgage calculation is completed, you may learn this put up.

Precise Calculation of What’s Being Instructed in The Video

• Secondhand Honda Metropolis Value: Rs.17 lakh rupees.
• Quantity in Financial institution (Financial savings): Rs.20 to Rs.25 lakh rupees.
• Senior Citizen FD Created: Rs.20 lakh rupees within the identify of the person’s father at SBI.
• FD-Backed Private Mortgage Taken: Rs.17 lakh rupees.
• Curiosity Fee on Private Mortgage: 8.5%.
• Mortgage Compensation Interval: 3 years.
• Complete Curiosity Paid on 17 Lakh Mortgage (over 3 years): Roughly Rs.2.5 lakh rupees.
• Complete Curiosity Earned on 20 Lakh FD: A bit over Rs.4 lakh rupees.

Primarily based on the above figures, the claimed “revenue” is the distinction between the FD curiosity earned and the mortgage curiosity paid:

Rs.1.5 lakh rupees (revenue) = Rs.4 lakh (FD curiosity earned) – Rs.2.5 lakh (mortgage curiosity paid)

My calculations To Confirm The Declare

As I used to be undecided if the above conclusion can ever be reached for actual, I did my very own cross chek.

I’m contemplating the next state of affairs (which seems to be extra relevant within the present scenario in August 2025.

Automotive Mortgage Particulars:

• Value Mortgage (FD Backed): Rs.17 Lakhs
• Mortgage Length: 3 Years
• Curiosity Fee on Mortgage: 8.7% (RBL Financial institution sometimes gives loans in opposition to FDs at an rate of interest 1-2% above the FD charge to cowl threat and administrative prices)
• Primarily based on the above set of numbers, I’ll calculate the next:
  • EMI on the pesonal mortgage.
  • Complete curiosity paid on the mortgage.

Sr. Citizen FIxed Deposit (FD):

• Deposit Quantity: Rs.20 Lakhs (however I’ll contemplate on Rs.17 Lakhs for revenue calculations).
• Mortgage Disbursal Share: 85% mortgage disbursal on the deposit quantity.
• Deposit Length: 3 Years
• Curiosity Fee on Deposit: 7.7% (RBL Financial institution – Untimely withdrawal not allowed)
• Primarily based on the above set of quantity, I’ll calculate the next:
  • Calculate the whole curiosity earned on deposit.

Now, let’s do the calculation verifying the claimed “revenue” within the video

Revenue Calculations (Apprehension #1)

Web Revenue/Loss Calculation:

• Complete Curiosity Earned on FD: Rs.4,25,937.95
• Complete Curiosity Paid on Mortgage: Rs.2,73,448

To find out the online revenue or loss from this technique, we subtract the whole curiosity paid on the mortgage from the whole curiosity earned on the fastened deposit:

Web Revenue/Loss = Complete Curiosity Earned on FD – Complete Curiosity Paid on Mortgage

Web Revenue/Loss = Rs.4,25,937.95 – Rs.2,73,448 = Rs.1,52,489.95

Primarily based on the particular charges and the deposit quantity of Rs.17 Lakhs, the calculations point out a web revenue of Rs.1,52,489.95 over three years.

This demonstrates that even with a decrease FD quantity that straight matches the mortgage quantity, the technique of making the most of automobile mortgage is be viable.

This aligns with the video’s assertion that one can “revenue off of that automobile mortgage” and “earn more money than you’re spending in your curiosity.” So my first apprehension is now not there.

Clarification of The Above Calculation?

You would possibly ask, for a similar quantity of Rs.17 Lakhs and for a similar length of three years, with mortgage providing a 1% higther rate of interest (in comparison with FD), how can the calculation nonetheless exhibits revenue?

Let’s perceive how this occurred.

• The mortgage quantity and FD quantity are each Rs.17 Lakhs.
• The length is 3 years, and
• The mortgage rate of interest (8.7%) is 1% greater than the FD rate of interest (7.7%)

The explanation a revenue continues to be made, regardless of the mortgage having a better rate of interest, lies within the mechanics of how curiosity is calculated and utilized for deposits versus loans:

For the Mounted Deposit (FD):

• You’re incomes curiosity on the total principal quantity of Rs.17 Lakhs for the whole length of three years.
• The curiosity earned is compounded yearly. Which means on the finish of every 12 months, the curiosity earned is added again to your principal, and within the subsequent 12 months, you earn curiosity on this bigger sum.
• This “curiosity on curiosity” impact considerably boosts your complete earnings over time. The depositor repeatedly earn on the preliminary Rs.17 Lakhs and the accumulating curiosity.

For the Mortgage (EMI-based):

• Whereas the annual rate of interest on the mortgage (8.7%) is greater, you’re paying curiosity on a regularly decreasing principal steadiness (learn extra about it intimately right here).
• Every month, whenever you pay your EMIs, a portion of that cost goes in the direction of paying off the principal quantity of the mortgage, and the remaining portion goes in the direction of curiosity. For instance, in case your EMI is say Rs.10,000:
  • EMI (Principal part): Rs.3,500 (part of EMI is principal which reduces your mortgage excellent steadiness).
  • EMI (Curiosity part): Rs.6,500 (this half if the curiosity earned by the financial institution).

Because the principal quantity excellent decreases with every passing month, the bottom on which the curiosity is calculated additionally shrinks.

Due to this fact, you aren’t paying 8.7% curiosity on the total Rs.17 Lakhs for the whole three years. The overall curiosity paid is the sum of curiosity paid on the diminishing principal over the mortgage time period.

My apprehinsions associated to feasibility of the maths behind such profiting has vanished. Now, I’ve realized that the idea of “decreasing steadiness methodology” is behind this profiting and never some finfluencer’s hack.

So I’m good on this now.

Money Move Concern

Our earlier calculations have confirmed the potential for web revenue from leveraging an FD-backed automobile mortgage.

However a major sensible problem emerges regarding affordability and money circulate administration.

My second apprehension will spotlight the core concern which the speaker of the video has not clarified:

• The requirement of considerable upfront capital: The particular person endeavor this technique, although profiting, should first possess the whole quantity wanted for the automobile buy (e.g., Rs.17 lakhs to deposit within the FD). This instantly restricts the technique to solely those that are already fairly well-off financially. This defined technique will not be for somebody who genuinely wants a mortgage to afford the automobile.
• The burden of month-to-month EMI funds: Regardless of having the principal quantity, the person nonetheless incurs a major month-to-month monetary dedication. As calculated, for a Rs.17 lakh mortgage over 3 years, the EMI could be roughly Rs.54,818 every month.

This brings forth a important query of affordability for a good portion of middle-class India.

Even when somebody has managed the lump sum for a automobile, can how they may afford to pay an EMI of over Rs.54,000 each single month for 3 consecutive years?

An individual who earns abour Rs.100,000 per 30 days will see virtually 50% of his revenue going into the EMI. He must considerably cut back his disposable revenue. What number of can afford to scale back 50% of their expense for a automobile?

I believe, a really tiny minority will do it, regardless of the general long-term revenue.

The technique, due to this fact, appears extra fitted to sver particular people. Who’re they:

• One with not simply capital, but additionally,
• With sturdy and constant month-to-month money circulate to handle such excessive EMIs with out monetary stress.

Conclusion

Our dialogue has completely explored the steered monetary technique: making the most of a automobile mortgage by leveraging a Mounted Deposit (FD).

Initially, the idea appears counterintuitive, as one sometimes expects to pay curiosity on a mortgage, not earn from it.

Nonetheless, because the video suggests, it’s doable to “earn more money than you’re spending in your curiosity”.

Then, we confirmed this mathematically the next:

• For a Rs.17 Lakh FD over 3 years at 7.7% curiosity, a complete of Rs.4,25,937.95 in curiosity is earned.
• Concurrently, for a Rs.17 Lakh mortgage (in opposition to this FD) at 8.7% over 3 years, the whole curiosity paid is Rs.2,73,448.
• This manner the particular person can truly make a revenue of Rs.1,52,489.

The essential issue enabling this web revenue of ₹1,52,489.95 is an idea referred to as decreasing steadiness methodology of EMI calculation for financial institution loans.

Nonetheless, a major the practicality and affordability of this technique, for the common Indian middle-class particular person, could be very uncertain. Why?

Whereas mathematically worthwhile, it necessitates the borrower already possessing the whole automobile quantity (e.g., Rs.17 Lakhs) to put in an FD. Extra importantly, it requires them to handle substantial month-to-month EMI funds (roughly ₹54,818 for a ₹17 Lakh mortgage) for the mortgage tenure.

This excessive month-to-month outflow presents a substantial money circulate burden, making the technique viable just for these people who find themselves already very wealthy.

Have a contented investing.