Tata Punch is among the most popular vehicles in its class as people are drawn to it due to its high safety standards, latest features and rugged appearance.
This post talks about what your salary should be if you wish to own the base trim of the Tata Punch. People often stretch their budgets while buying their dream cars. However, many financial advisors highlight the importance of following certain principles to ensure that you don’t end up in a tough situation later on. It is something very common and happens frequently. People often underestimate the expenses associated with owning a car. For now, let us focus our attention towards the details of this case with the base Tata Punch as an example.
What Should Be Your Salary To Afford Base Tata Punch?
As per many financial gurus, there is a rule called the 20/10/4 rule. This represents 20% of the on-road price of your desired car as a down payment, 10% of your monthly salary as the EMI and a loan tenure of 4 years. Using this rule, you can calculate whether or not your current income levels warrant you to go for a particular car model. This can also be applied to motorcycles. In our example, the base model of the Tata Punch costs Rs 6.60 lakh, on-road in New Delhi. Therefore, 20% of this, which is Rs 1.32 lakh, should be the down payment.
For the remaining Rs 5.28 lakh amount, you need to take a bank loan. Now, the average rate of interest for a car loan today is around 9.5%. Using some basic calculations, the EMI for a tenure of 4 years comes out to be around Rs 13,500. Now, if we consider this to be 10% of your monthly salary, you should be making approximately Rs 15.60 lakh annually. We all know that it is a huge sum and not something that most people make. This should serve as a perfect guide for you to understand how much should you be spending on your vehicle. Sure, you can tweak these numbers a little bit. Still, staying close to these stats will ensure that you won’t feel the financial burden of owning a car.
Our View
I believe many readers would criticize this rule. However, I have observed that people often don’t think beyond the on-road price and EMIs while buying a new car. Furthermore, I must mention that the running costs, service costs, maintenance charges, fuel prices, repairs, etc., can be quite expensive. It is during such times that people feel a huge burden of the car. To stay stress-free in these circumstances, it is advisable to plan for the long term from the very beginning. That is where rules like the 20/10/4 come in handy. I would advise our readers to remain as close to this as possible.
Also Read: Tata Punch Accomplished vs Citroen Basalt You (Base Model) – What to Buy for Rs 8 Lakh?
