How this loan affordability check works
Lenders look at how much of your monthly income already goes to loan payments. This planner does the same. It takes your take-home pay, applies the share you are willing to spend on EMIs, subtracts what you already pay, and treats the rest as your room for a new EMI. It then works backwards from that EMI, your interest rate and the tenure to the largest loan it can repay.
Why 40% is the default limit
Many lenders cap total EMIs somewhere between 40% and 50% of take-home pay, and a common household rule of thumb is to stay nearer 30% so the rest of the budget can absorb a bad month. The planner starts at 40% and marks anything at or under 30% as comfortable. Lower the limit if your income varies month to month or you have dependants.
A worked example
Say you take home 5,000 a month and already pay a 600 car EMI. At a 40% limit your total EMIs can reach 2,000, so a new loan can take up to 1,400 a month. At 8% over 20 years, 1,400 a month repays a loan of about 167,000. Stretch the tenure to 25 years and the same EMI covers about 181,000, but you pay roughly 70,000 more in interest over the life of the loan.
What tenure really changes
A longer tenure lowers the EMI and raises the loan you qualify for, which is why it is tempting. The cost is interest. Each extra year adds a full year of interest on the remaining balance, and in the early years most of every EMI is interest, not principal. Compare two tenures here before you accept the longest one a lender offers.