I have accumulated sufficient corpus in aggressive hybrid funds to completely repay my five-year car loan, which is being serviced at nine per cent. Should I prepay my loan or continue to pay the EMIs and let the accumulated corpus grow further?
My general principle is that one should carry on with any loan that is for the purpose of buying an asset with a growing value. However, to buy any depreciating asset, one should never borrow money in the first place.
In this case, you might need to substitute your car with another in a few years' time, qualifying it as a depreciating asset. A loan taken for such an asset because of some emergency or need should be repaid as early as possible.