How it’s calculated
- Maximum car EMI = 40% of (net monthly income − existing EMIs).
- Loan you can repay = maximum EMI × (1 − (1 + r)−n) ÷ r, with r = rate ÷ 12 ÷ 100 and n = months.
- Car budget = that loan + your down payment.
Example: ₹80,000 net monthly income and ₹10,000 of existing EMIs gives a maximum car EMI of ₹28,000. At 9% over 5 years that repays about ₹13,48,854, so with a ₹1,00,000 down payment the car budget is about ₹14,48,854.
Remember insurance, fuel and maintenance. A lower EMI than the maximum leaves room for them.