Is it advisable to go for an auto loan if I can make the full payment for a new car?

There needs to be more numbers with your choices, without those any answer is purely speculation.

Assuming that India is much like the US, you are almost always better to go with a company leased car. That is if you are not responsible for the lease if your employment ends with the company.

Here in the US companies typically reimburse, so tax free, their employees for about 50 cents per mile, or about 31 cents per kilometer. This barely covers the gas and insurance and falls way short when one includes deprecation and maintenance. So it is better to have the company to pick up all those costs.

Borrowing money on a car is just plain dumb no matter what the interest rate. So I would stick with choice number 1 or 3 depending on the arrangement for the company leased car.

The next question becomes how much you should spend for a car? I would say enough to keep you happy and safe, but not much more than that until you are wealthy.

Without knowing the terms of the company leased car, it's hard to know if that would be preferable to purchasing a car yourself. So I'll concentrate on the two purchase options - getting a loan or paying in full from savings.

If the goal is simply to minimize the amount paid for this car, then paying the full cost up-front is best, because it avoids the financing and interest charges associated with a loan.

However, the money you would pay for this car would come out of somewhere (your savings). If your savings were in an investment earning a risk-adjusted return rate of, say, 5% APY and the loan cost 1% APY, you'd have more money in the long run by keeping as much money in your savings as possible, and paying the loan as slowly as possible, because the return rate on your savings is higher.

Those numbers are theoretical, of course. You have to make a decision based on your expectation of the performance of your investments, and on the cost of the loan. But depending on your risk tolerance and the loan terms available to you, a loan may well make sense. This is especially true when loans costs are subsidized by manufacturers, who often offer favorable financing on new cars to drive demand. But even bank loans on cars can be pretty inexpensive because the car is a form of collateral with predictable future value. And finally, you should consider tax treatment -- not usually a consideration in purchases of cars by consumers in the US, but can vary due to business use and certainly may be different in India.

See also: How smart is it to really be 100% debt free?

What percentage of your savings is the full car payment? If it's a significant chunk, then I'd finance some of the cost of the car in order to maintain liquidity.

Let me explain this to you as easily as I can.

A car is a depreciating asset which means its value is constantly dropping. So, paying cash for something that is losing money value means that you’re losing money in two directions which is not a good thing.

It only makes sense to start considering a car loan as an option when you have the cash available to pay for the car you want, but you feel like you can find a better use for that money that is worth paying the interest on the auto loan.

This should help you make a decision.

There’s no single answer. Find out the amount of taxes, and the interest rate you would pay for a car loan. Compare the final charges. It depends on the state and your lender, so the question itself is a bit abstract. Or you’re asking whether it is possible in principle? Then YES, there are cases, when the loan is more profitable. Just explore your own case and compare different lenders.