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Car Loan Tips: If you are planning to take a car loan, first take out the information of 20/4/10 rules. This easy rule can reduce the burden on your pocket.
Financial experts recommend adopting 20/4/10 rules while taking a car loan. This rule decides how much down payment you should make, how much of the loan period should be and how much part of your salary should be spent on EMI.
20% down payment: Pay the price of the car at least 20 percent in advance. This will reduce the loan amount and the burden of interest will be lighter. It can be a good option to save in advance or use a trade-in value of an old car.
10% income in EMI: Your monthly EMI should not exceed 10 percent of your net salary. This will not affect the rest of the expenses and savings. Suppose your salary is ₹ 60,000 and you are buying a car worth Rs 10 lakh. According to the rule, you have to make a down payment of Rs 2 lakh. EMI is to be repaid in 4 years and it should not exceed Rs 6,000 (10 percent of salary). If EMI comes out more than this, it would be better if you take a small car or increase the down payment.
What is the benefit of 20/4/10 rule?
Adopting the 20/4/10 rule not only to pay less interest, but the car loan maintains balance instead of spoiling your financial situation, that is, the dream of the car will also be fulfilled and EMI will not be stressed.
After starting a career with print media, he has been working as a senior copy editor in News18Hindi for the last 8 years. Business news team is part of the team for almost 4 years. He has experience of about one and a half decades in the media. Business …Read more
After starting a career with print media, he has been working as a senior copy editor in News18Hindi for the last 8 years. Business news team is part of the team for almost 4 years. He has experience of about one and a half decades in the media. Business … Read more