Which Car Should You Buy on a ₹50,000 Salary? Here’s a Practical Guide Using the 20-4-10 Rule
Which Car Should You Buy on a ₹50,000 Salary? Here's a Practical Guide Using the 20-4-10 Rule
If your monthly income is ₹50,000, buying a car requires smart financial planning. Experts recommend using the 20-4-10 formula to avoid overburdening your budget.
This rule suggests that you should make a down payment of at least 20% of the car’s on-road price, take a loan for no more than 4 years, and keep your EMI under 10% of your monthly income. That means, with a ₹50,000 salary, your car EMI should ideally not exceed ₹5,000 per month. This helps ensure your essential expenses like rent, groceries, and bills remain unaffected.
For someone in this salary range, a car priced under ₹7–8 lakh (on-road) fits well. For instance, if you consider a car like the Maruti Suzuki Celerio LXI with an approximate on-road cost of ₹6.2 lakh, you would need to make a down payment of around ₹1.24 lakh (20%). The remaining ₹4.96 lakh can be financed through a 4-year loan. At 8% interest, the EMI works out to approximately ₹12,109—which is over twice the recommended ₹5,000 limit. This makes it slightly out of reach unless you have very minimal other financial obligations.
Instead, cars priced around ₹5–6 lakh are more suitable. Models like the Maruti Suzuki Alto K10, Renault Kwid, Tata Tiago, and Tata Punch (base variants) are better options. These cars are not only affordable but also low on maintenance, making them easier to manage in the long run.
On the other hand, popular SUVs such as the Hyundai Creta, Kia Seltos, Mahindra Thar, or Scorpio usually have an on-road price starting at ₹12 lakh or more. Loans for these vehicles can push your EMI to ₹12,000–15,000, consuming up to 30% of your income. This is financially risky, especially if you’re also managing household expenses, children’s education, or rent.
Before finalizing any car, it’s important to sit down and calculate all your monthly expenses. Make sure that adding a car EMI won’t disturb your ability to save or meet day-to-day needs. It’s also wise to choose a vehicle that’s fuel-efficient, has readily available spare parts, and doesn’t require frequent, costly maintenance.
In short, on a ₹50,000 salary, aim for a modest car, keep your EMI well within the ₹5,000 limit, and don’t stretch the loan period. Practicality over prestige will keep your finances stable and give you peace of mind with your new vehicle.
