Your finances
The car & loan
How tenure changes your affordability
| Loan tenure | Max on-road price | EMI/month | Total interest paid |
|---|---|---|---|
| — | |||
A longer tenure lowers EMI so you qualify for more loan under the DTI rule — but you pay materially more interest over the life of the loan. Running cost doesn't change with tenure.
How we calculate this
Two constraints, bound by the tighter one:
(A) Debt-to-income rule (banker rule): Car EMI ≤ 40% × take-home − existing EMIs. This is what lenders apply during underwriting — the widely-used "40% DTI" ceiling across Indian retail banks.
(B) Car-keeping rule (real budget): Car EMI + running cost ≤ (20/25/30%) × take-home. This is what actual cash flow can sustain month after month, factoring in fuel, insurance, and service. The percentage is your chosen comfort level above.
EMI formula: EMI = L × r × (1+r)^n / ((1+r)^n − 1) where L = loan amount, r = monthly interest rate, n = tenure in months. Max loan = max EMI ÷ EMI factor. Max on-road price = max loan + your down payment.
Running cost (per month): (km ÷ 12) × fuel-₹/km + 0.3% × car price. The 0.3%/month covers comprehensive insurance (≈2.5%/yr of IDV) plus routine service and tyres (≈1%/yr) — combined ≈3.5% annual, or ~0.3% monthly.
Default fuel costs (₹/km): petrol ₹7.0 (15 km/L @ ₹105), diesel ₹5.3 (18 km/L @ ₹95), CNG ₹3.7 (22 km/kg @ ₹82), EV ₹1.1 (home charging, 7 km/kWh @ ₹8). If you charge an EV at fast DC stations expect ₹3-4/km instead.
Which rule bound you is shown below the main number. If the debt rule bound you, you have income headroom for a bigger car but either your existing EMIs are eating into the 40% cap or your comfort level is set above your DTI ceiling. If the car-keeping rule bound you, your chosen comfort level is lower than what your DTI would allow — often the correct answer for first-time buyers or high-km users.
Frequently asked questions
What car can I afford on a ₹10 lakh annual salary in India?
On ₹10 L/year take-home (about ₹83,000/month) with no existing EMIs, a ₹1.5 L down payment, 5-year loan at 9.5% and 12,000 km/yr of petrol driving, your safe ceiling is roughly ₹6.8–7.5 L on-road under a balanced budget. The exact number depends on your existing EMIs and fuel choice — enter your numbers above to get it.
Why do most affordability calculators get this wrong?
Bank calculators only check the debt-to-income (DTI) rule: your total EMIs should be under 40% of take-home. That ignores fuel, insurance, and service — which on a 12,000 km/yr petrol car adds ₹10,000–15,000/month on top of EMI. A car you can technically borrow for may still wreck your monthly cash flow. CarItch enforces both rules and binds by the tighter one.
What is the 20/25/30% rule in this calculator?
This is the share of monthly take-home you are comfortable spending on the car all-in (EMI + fuel + insurance + service). Conservative = 20%, balanced = 25%, aggressive = 30%. Going over 30% puts you in "house-poor" territory where unexpected repairs or a job change hurts badly. Balanced (25%) is what most Indian financial planners recommend.
Should I take a 7-year loan to afford a bigger car?
It lowers your EMI, which raises your affordability under the DTI rule. But the running cost does not change — and over 7 years you pay a lot more total interest. A longer tenure lets you buy more car, not own more car. For a directly comparable trade-off, this calculator shows max affordable price at 3 / 5 / 7 years side by side.
Does this include insurance and service costs?
Yes. Running cost per month is estimated as (km/month × fuel-cost-per-km) + 0.3% of the car's price (covers comprehensive insurance + routine service). The per-km fuel rate is ₹7/km petrol, ₹5.3/km diesel, ₹3.7/km CNG, ₹1.1/km EV (home charge). These are editable if your numbers differ.
Can I share my result with someone?
Every input change writes to the URL, so the address bar is a shareable permalink. Copy it and the other person sees the exact same scenario.