This guide walks you through every field of the Car Affordability Calculator so you can judge if a car comfortably fits your budget or is stretching your finances.
Quick overview #
The calculator estimates monthly EMI, projected fuel & insurance spend (over your intended ownership years) and an Affordability Ratio = EMI ÷ Monthly Net Income. Open it here: Car Affordability Calculator.
Inputs you will need #
- Annual Income (gross) & optional annual Tax paid.
- Ex‑showroom Price + Road Tax + Other costs (on‑road total).
- Planned Down Payment % (≥ 20% recommended).
- Loan Tenure (years) & expected Interest Rate (% p.a.).
- Annual Insurance premium.
- Monthly Distance (km), Mileage (km/l), Fuel Price (₹/litre).
- Intended Car Lifespan (years you will keep it).
Step-by-step #
- Open the calculator and scroll to the form (or use the Open Calculator link on this page).
- Enter Annual Income (and optional Tax to reflect net affordability).
- Add Price (Ex‑Showroom) and Road Tax + Others → on‑road basis.
- Set Down Payment % (higher cuts EMI/interest).
- Choose Tenure and Interest Rate.
- Enter Insurance, then Fuel assumptions (distance, mileage, fuel price).
- Pick Car Lifespan (projects cumulative fuel + insurance).
- Click Calculate to view EMI, ratio and ownership totals.
Affordability Ratio Bands
≤ 15% Affordable • 15–25% Stretching • > 25% Not affordable.
Reading the results #
- Affordability Ratio: EMI ÷ Monthly Net Income (see bands above).
- Monthly EMI: computed using standard amortising loan (EMI) formula.
- Fuel Cost (Over Lifespan): projected fuel spend (monthly distance × lifespan × fuel price ÷ mileage).
- Total Ownership Cost: On‑road price + Fuel Cost + Insurance (across lifespan).
- Verdict & Tips: plain-language guidance summarising gaps and suggestions.
Practical examples #
Comfortable Scenario
Net Monthly Income ₹50,000 • EMI ₹7,500 → Ratio 15% (Affordable).
Too High
Net Monthly Income ₹40,000 • EMI ₹12,000 → Ratio 30% (Not affordable).
Common mistakes #
- Ignoring on‑road additions (registration, handling, accessories).
- Overestimating mileage or underestimating distance driven.
- Using optimistic interest rate instead of bank quote.
- Forgetting other EMIs which lower safe capacity.
Next steps #
- If Affordable still verify insurance, maintenance & build emergency fund (3–6 months).
- If Stretching raise down payment or shorten tenure & re‑check interest impact.
- If Not affordable pick a lower priced model or postpone until you can save more.
Need help? #
Talk to a qualified advisor before taking a large loan commitment—especially if your affordability ratio is near the upper band.