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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Debt Management and Loans

Meera Iyer has a gross monthly income of Rs 1,20,000 and existing EMIs of Rs 20,000 on a car loan. A bank caps total fixed obligations at 50% of gross monthly income. What is the maximum EMI she can take on a new home loan?

The maximum new EMI is Rs 40,000. The bank allows total obligations of 50% of Rs 1,20,000, which is Rs 60,000. Subtracting the existing car loan EMI of Rs 20,000 leaves Rs 40,000 available for the home loan.

  1. ARs 40,000Correct
  2. BRs 60,000
  3. CRs 50,000
  4. DRs 20,000

Explanation

Permitted obligations = 50% x 1,20,000 = Rs 60,000. Existing EMI is Rs 20,000, so the room for a new EMI is 60,000 - 20,000 = Rs 40,000. Rs 60,000 ignores the existing car loan.

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