Affordability score for your car purchase — EMI ratio, down payment adequacy, emergency fund check and total true ownership cost.
A car is one of the largest purchases most Indians make, yet it's also a depreciating asset. The true cost includes not just the EMI but fuel, insurance, maintenance, parking and depreciation. The 20/4/10 rule provides a simple affordability framework.
General guideline: car price should not exceed 50% of your annual take-home salary. On ₹15L annual take-home, affordable car range is ₹6–8L. EMI should be under 10–12% of monthly take-home. Always check total ownership cost, not just EMI.
For cars, a small loan (30–50% of car price) is financially acceptable — car loans at 9% are low enough that the opportunity cost of liquidating investments is higher. However, financing 80–90% of a car price significantly increases the true cost through interest.