Car Loan Formula: Buying a car is not easy for many people. Buying a car costs a lot. Everyone takes a loan for not being able to buy a car at once. Buying a car costs a lot. Everyone takes a loan for not being able to buy a car at once. The 20-10-4 formula is a boon for loan car buyers. Let's know more about this. According to this formula, if you buy a car, the loan will not be burdened much. You will be able to clear the car loan easily. If you increase the down payment by 20%, you will be more comfortable paying off the loan. Hence, try to make the down payment (of the on-road price) above 20% as far as possible, so as to reduce the loan amount and keep the EMIs low.
Want to take a car on loan? So this formula will be beneficial
Now the loan that has been taken, is also necessary to pay. For this, the EMI of the loan is done, i.e., the loan is paid in installments every month. Now, if a person is not careful while taking a car loan then he can be troubled while repaying the loan taken. So, today we are going to tell you about the 20-10-4 formula. This formula proves to be very useful for people who take car loans. Keeping this formula in mind, car loan borrowers can easily pay the monthly EMIs.
What is the 20-10-4 formula?
The 20-10-4 formula means to buy any vehicle, make a down payment of 20% of its on-road price and take a loan for the remaining amount. While taking a loan, keep in mind that its EMI should not exceed 10% of your monthly income and the loan tenure should be a maximum of four years. That is, in the 20-10-4 formula, 20 means 20% down payment (of on-road price), 10 means - 10% EMI of monthly income, and 4 means - four years of the loan tenure.
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According to this formula, if you buy a car, the loan will not be burdened much. You will be able to clear the car loan easily. If you increase the down payment by 20%, you will be more comfortable paying off the loan. Hence, try to make the down payment (of the on-road price) above 20% as far as possible, so as to reduce the loan amount and keep the EMIs low.
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