Formula To Set Budget For Car: Everyone in life wants to buy their own car. But buying a new car is not easy for everyone. Because for this a lot of cost has to be spent. But not everyone is able to spend so much money at once. Although many people buy cars on loan as well, in such a situation, if you are also thinking of buying a car on loan, then you should know some things first, so that you do not face any problem later.

how to make budget

If you want to buy a new vehicle and you are unable to decide the budget for it, then you should adopt a formula, which is very popular to finance anything. According to this formula, you should not spend more than half of your annual income to buy a new vehicle.

For example, if you earn 15 lakh rupees every year, then you should not spend more than 7.5 lakh rupees for the car, or if your annual income is 20 lakh rupees, then you should not spend more than 10 lakh rupees on your car. Similarly, you can decide the budget of your car on the basis of your annual income. In this price, the car should be judged according to the on-road price and not just on the basis of the ex-showroom price.

understand this math

You must keep in mind the 20/4/10 formula while taking a car loan. That means you must make at least 20% downpayment while buying the vehicle. Also, do not fix the time for the loan for more than four years and also note that the EMI of your vehicle should not exceed 10% of your monthly income.

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