Car Loan: If you do this while buying a car loan, the cost will be reduced! – are you planning to buy your dream car with a loan then use this 20-4-10 rule to cut your burden

It is the dream of many to own a car. There are various ways to own a car. It varies according to each individual’s income level and personal situation. There are various ways for everyone to buy a new small car, buy a second hand car, take a loan and buy a car according to their needs.

Car loan

Most people buy their own car by taking a car loan. However, making a few mistakes while taking a car loan can result in a lot of expenses and future burden.

Rule 20/4/10

That’s why there is 20/4/10 rule to avoid such burden and problems. With this you can not only buy your own car with a car loan but also repay the loan quickly without increasing the burden every month.

20/4/10 What does the rule say?

This rule is very easy to understand.

You have to pay 20% of the on-road price of the car you are buying as down payment. 20% of the car price is not a huge amount. At the same time it is not a very small amount. Thus, overloading can be avoided.

Car Loan EMI

When you take a car loan and pay monthly EMIs, your EMI amount should not exceed 10% of your monthly income. By doing this, you can ensure that your monthly budget is not burdened and other expenses are not affected.

Loan period

After taking a car loan, the loan repayment period should not exceed 4 years. In this way, you can not only clear the loan quickly but also avoid the interest burden.

Your decision

This 20/4/10 rule does not apply to everyone. Each person’s personal circumstances vary according to income. However, by making some modifications to this rule according to your situation, you can not only reduce the burden but also make your own car dream come true.