Financial Calculators
Car Affordability Calculator
Work backwards from your salary to the car price that fits it, before the showroom works forwards from the car.
Your comfortable car budget
₹12,83,901
- Affordable EMI
- ₹22,500
- Loan this EMI supports
- ₹10,83,901
- Plus down payment
- ₹2,00,000
A common thumb rule keeps the car EMI within 15% of take-home income so it never crowds out investing. On-road price includes insurance and registration; keep those inside the budget too.
Budget first, brochure second
The sensible order is to fix the EMI you can carry, convert it into a loan amount, add your down payment, and only then shortlist cars. A widely used thumb rule keeps the car EMI within 10-15% of take-home income so it never competes with SIPs, rent and family expenses.
Remember that the on-road price includes registration, insurance and accessories, typically 10-12% above ex-showroom. Keep those inside this budget, not on top of it.
How the budget is computed
Max EMI = income x cap%\nLoan = EMI x [ (1+i)^n - 1 ] / [ i x (1+i)^n ]\nBudget = Loan + down payment\n\ni = rate / 12 / 100, n = tenure in monthsWorked example: a take-home of Rs 1,50,000 with a 15% EMI cap gives an affordable EMI of Rs 22,500; at 9% for 5 years that supports a loan of about Rs 10,83,901, and with a Rs 2,00,000 down payment the comfortable car budget is about Rs 12,83,901.
Frequently asked questions
Why cap the EMI at 15% of income?
Because a car depreciates while your goals compound. Keeping the EMI small protects SIPs, rent and emergencies; families with no other loans sometimes stretch to 20%, but 15% is a safe ceiling.
Should I take a longer tenure to afford a bigger car?
A longer tenure raises the budget but also the total interest, and you may still be paying EMIs when the car is old. Four to five years is the sweet spot for most buyers.
Is a bigger down payment better?
Usually yes, as long as it does not raid your emergency fund. A larger down payment means a smaller loan, lower interest outgo and often better loan terms.
Does this include insurance and registration?
The budget shown is your total spending capacity. On-road price includes registration and insurance, so compare the budget against on-road quotes, not ex-showroom prices.
Car sorted. Goals next.
The same discipline that sizes a car EMI builds education and retirement funds too.