Loan and personal finance decisions

This is a topic I have always been confused with. When I took my Bike, I kept on thinking whether I should buy the Bike directly paying full cash or should I get a loan and pay the EMI. Since I have money at that time, I could easily pay the full price. But if took a loan, that can be used to reduce my tax amount and also I would be having the money to be used for other purposes. Anyway, I paid in full and took the bike. But the important thing is, I still can’t decide which option I should choose in such a situation.

Well, these days I have started planning to buy a car. Of course I am planning for a cheaper one but I really need some advice on whether I should get it in EMI or should I save money every month and buy it when I the full amount in cash. I suppose the deciding factor would be how much I have and how much I earn every month. The good part about this story is that, many banks are ready to give the loan now a days and I can take it anytime I want since this will be my first bank loan as well. I am in no debt and that’s why bank people seem to be happy to welcome my loan request. Some banks are even coming up with new lower rates for company employees and I think it’s okay to take these loans.

The only reason I am confused with is the extra amount I am going to pay when I take a bank loan. Most local bank here charges around 11-14% annually on personal loans. So, if I take a loan for, say 6 years, that some good amount of extra money that I am going to pay. But if I pay the amount in full instantly when I buy the car, I will be exempted from this extra amount. So, my dear readers, if you know something about finance, please tip me on how exactly I should take the decision. What are the points that I should consider while taking such financial decisions. Thanks.

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