If you want to own the base model variant of the Tata Punch, you should check if you have that capacity in your pocket. Owning a dream car is a long-fetched dream for many, and for this, people do stretch their budgets. But before making any financial commitment, one must follow some ground rules to avoid falling into a financial trap in the future. Many future car buyers underestimate the real price of owning a car. This guide is the minimum salary needed in order to own a Tata Punch, explained with a structured financial approach.
Basic Salary Enough to Buy Tata Punch?
Often, the 20/10/4 rule is followed by financial advisors to buy a car. This means:
- The buyer should make a down payment of at least 20% of the car’s on-road price.
- This isn’t going to exceed 10% of the monthly income by all means.
- The car loan is not going to be granted for more than 4 years.
The essence of this rule is to judge whether the present level of income is sufficient to finance a particular car model without stretching the budget too thin. This applies to cars as well as motorcycles.
For example, the base model of the Tata Punch in New Delhi has an on-road price of around ₹6.60 lakh. The rule of 20/10/4 dictates that:
- 20% down payment equals ₹1.32 lakh.
- The balance amounting to ₹5.28 lakh will have to be financed.
The break up of loan and EMI
The average interest rate of a car loan in India is around 9.5%. At this rate, if you are taking a four-year loan for the remainder of ₹5.28 lakh, your EMI payment would be around ₹13,500.
To guess the perfect salary to maintain this EMI:
- By the 10% rule, your EMI should not exceed 10% of your monthly salary.
- This means that your monthly salary should be somewhere around ₹1.35 lakh (assuming ₹13,500 as EMI times 10).
- That would make it ₹16.20 lakh per year.
However, that’s quite a range for a salary, and not everyone earns that much. Therefore, what is important here is to play around with certain numbers, keeping fairly close to the guideline, so that one does not face financial strain when owning a car.
The hidden costs of car ownership
Most people think in terms of the price of the car or EMI, but there are further costs that come with car ownership like:
- Fuel expenses: based on your daily use of petrol, diesel, or CNG.
- Assurance: regular upkeep, repairs, and unforeseen charges.
- Insurance premiums: mandatory insurance charges for car insurance that vary based on coverage.
- Road tax and registration fees: charges applicable on purchase.
- Depreciation and resale value: decrease in the value of the vehicle in due course, influencing the value at resale.
- Parking charges: monthly parking can add up if one lives in a metropolitan city.
Our Perspective
With all these factors taken into consideration, it is preferably recommended to maintain a financial buffer apart from making EMI payments, so as to take care of all such expenses.
Perspective
Not an overly favorable rule, the 20/10/4 guideline may well inspire certain people to ding it. However, it is an excellent guideline for financial stability. Many buyers only consider the on-road price or EMI options without looking at other ownership costs: fuel, maintenance, service charges, insurance, and other miscellaneous costs should definitely be looked at before reaching a final purchase decision.
Indeed, the ownership of a car entails a plethora of financial obligations besides the EMI payments. A long term financial strategy minimizes stress and makes the whole concept of car owning enjoyable instead of harsh.
Final Recommendations.
If you plan on buying the Tata Punch or for that matter any car, observe the following recommendations:
- Follow the 20/10/4 rule as nearly as possible.
- Check your credit score to get a lower rate of interest on the loan.
- Consider going for second-hand cars, in case new car payments are a struggle.
- Plan for maintenance and fuel costs while finalizing your budget.
- Compare loans from banks and NBFCs before you choose one.
- Keep these in mind so that you remain fiscally responsible and have fun with the car.