What is the 20/10/4 rule when taking a car loan

1.This is a thumb rule used while buying a car on a loan.
2.20% of the onroad price of the car should be paid as down payment while booking the vehicle.
3.The EMI should not be more than 10% of the monthly income.
4.The loan tenure should be for a maximum of four years.
5.This rule will vary from individual to individual, according to their monthly income and other liabilities.


Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.