Car Loan: People in India often buy expensive cars just for the brand and hobby without financial planning. They take more loan and keep paying EMI for a long time. Therefore, adopt this formula and save money

Car Loan: Buying a car has become a necessity in today's era, but a loan taken in the wrong way can take a toll on your financial health. Most people take car loan without proper planning and later get burdened with EMI. But if you adopt the 20×4×10 formula, not only will you get a cheap car but you will also be able to buy it easily without much financial pressure.

What is the 20×4×10 formula?

This is a smart financial strategy, which tells you how much down payment you should make while buying a car, how much EMI you should keep and for how long you should take the loan.

Make a 20% down payment – ​​You should pay at least 20% of the total cost of the car from your own pocket. This will reduce your loan amount and also save interest.

Repay the loan in 4 years – The tenure of the car loan should not be more than 4 years (48 months). The burden of interest increases if you take a loan for a longer period.

EMI should not be more than 10% of the salary – Your monthly EMI should not be more than 10% of your salary. This will also help you meet your other financial needs easily.

How will this formula help you?

Suppose you are thinking of buying a car worth Rs 10 lakh. If you follow the 20×4×10 formula then-

Make a down payment of Rs 2 lakh (20%).

Plan to repay a loan of Rs 8 lakh in 4 years.

Your monthly EMI should not be more than 10% of your salary.

If your salary is Rs 50,000, then your EMI should not be more than Rs 5,000.

Benefits of adopting the 20×4×10 formula

Low interest rate: By repaying the loan early, the total interest will be less.

Financial safety: By keeping a low EMI, money will be saved for other expenses.

You will not go over budget: You will avoid buying a more expensive car and the burden of debt will not increase.

Good credit score: By repaying the loan on time, your credit score will remain strong

Why is half of India not aware of this formula?

People in India often buy expensive cars just for the brand and hobby without financial planning. They keep paying long-term EMIs by taking more loans, which increases the burden of interest. If everyone knows the 20×4×10 formula, then everyone can buy the right car according to their need and budget and avoid unnecessary expenses.

If you are also thinking of buying a car, then adopt this formula and bring your car home in a cheap and smart way.

Disclaimer: Kalamtimes does not give any suggestion for any purchase or sale related to the stock market. We publish market related analysis quoting market experts and brokerage companies. But take market related decisions only after consulting certified experts.