You are here: Home » PF » News » Loans
Give your children well-structured mutual fund portfolio this Christmas
icon-arrow-left
Business Standard

Planning to buy a car? Use the age-old 20/4/10 rule to avoid debt trap

Don't over-leverage when buying a car

Topics
car loan | car loans

Bindisha Sarang 



Car loan, CAR

  • To make the most of your vehicle, use the age-old 20/4/10 personal finance rule.
  • 20 stands for the minimum percentage you should pay as down payment. This will decrease the overall cost of your loan.
  • 4 means you should finance a car for no more than four years. If you opt for a longer tenor, you will end up paying more in interest cost.
  • The sooner you close the loan, the earlier you will become the owner of the car. Until then it will be hypothecated to the lender.
  • 10 stands for the maximum percentage of your monthly income you should shell out for your car EMI.
  • Ideally not more than 30-35 per cent of your take-home salary should go towards servicing all your debts.

Planning to buy a car? Use the age-old 20/4/10 rule to avoid debt trap


TO READ THE FULL STORY, SUBSCRIBE NOW NOW AT JUST RS 249 A MONTH.

SUBSCRIBE TO INSIGHTS

What you get on Business Standard Premium?

  • icon Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
  • icon Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
  • icon Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
  • icon Pick your 5 favourite companies, get a daily email with all news updates on them.
  • icon 26 years of website archives.
  • icon Preferential invites to Business Standard events.

OR


Subscribe to Business Standard Premium

Exclusive Stories, Curated Newsletters, 26 years of Archives, E-paper, and more!

Insightful news, sharp views, newsletters, e-paper, and more! Unlock incisive commentary only on Business Standard.

Download the Business Standard App for latest Business News and Market News .

First Published: Sun, December 22 2019. 21:51 IST

RECOMMENDED FOR YOU

.