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I broke the 20/4/10 rule of buying a car

Disclaimer: The Content is for informational purposes only, you should not construe any such information or other material in this video as legal, tax, investment, financial, or other advice. Financial circumstances of every individual is different from other hence some concept can apply differently to every individual

✅ While I planned for my car I kept some rules in mind for a smooth financial ride 🚗

1. Maximum down payment - As per financial expert it is advised if you can keep at least 20% amount of the car as down payment. You can keep even more as per your situation. This would only help you to reduce your EMI burden

2. Time period of loan - As per the thumb rule of buying a car it is 4 years. But I took a loan of 5 years. Here I am planning to keep my savings distributed in a few mutual funds to get an average of 12-15% return in the next 5 years.
This is would help me cover my loan interest amount

🔺 When you are investing your lump sum amount in mutual funds make sure you have these three things A. Emergency Fund ☑️
B. Medical Insurance and Term Insurance ☑️
C. A steady cash flow ☑️

3. Car maintenance expenses - Keep it below 10% because the car is a depreciating asset.

Now I know what’s on your mind?

To pay 15,000 worth of EMI + Car maintenance expenses you need to be on a monthly salary/Income of 1,50,000. Sounds a bit stupid right?

Ensure your total debt commitments (i.e. your car loan EMI+ other loan EMIs put together) do not exceed 40% of your monthly household income. With your car loan expenses holding the lowest percentage in the lot.

☑️ Be very very strict while following rule no. 3. I repeat very strict with rule 3

This is what I think. Your views can be different.