FOIR: why the lender may push you to 5 years
Lenders look at FOIR, the share of your take-home pay that goes to all your EMIs together. Many want it within about 50%, some closer to 40%. With the 3-year EMI of ₹49,108, Gurpreet's EMIs add up to ₹67,108, about 48% of his pay. With the 5-year EMI of ₹32,614 they come to ₹50,614, about 36%, which passes either limit.
The credit score decides the rate. A score of 750 or more usually gets the better quotes, while late payments or many loan applications in a short time pull it down. Check your report before you apply. A 1% higher rate, 12% instead of 11%, makes the 5-year EMI ₹33,367 and adds ₹45,182 to the interest.
Frequently asked questions
What is the EMI on ₹15 lakh for 3 years?
At 11%, it is ₹49,108 a month. Interest is ₹2,67,891 and the total is ₹17,67,891. That saves ₹1,88,927 compared with 5 years, if your income and existing EMIs allow it.
How much is the 4-year EMI on a ₹15 lakh loan?
At 11% for 4 years, the EMI is ₹38,768 and interest is ₹3,60,878. With Gurpreet's car EMI, his total would be ₹56,768, about 40.5% of his pay, right at the stricter limit.
Should I take 7 years to lower the EMI?
At 11%, 7 years means an EMI of ₹25,684 but interest of ₹6,57,427, which is 43.83% of the loan. That is ₹2,00,609 more than 5 years. Use it only if a shorter EMI will not pass the lender's check.
Do my existing loans reduce how much I can borrow?
Yes. Every EMI you already pay counts in FOIR. At 50% of ₹1,40,000, Gurpreet has ₹70,000 for all EMIs. His ₹18,000 car EMI leaves ₹52,000, which is why the 5-year EMI of ₹32,614 fits comfortably.
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