How to use the car loan EMI calculator
- Enter the loan amount, the rate your lender quotes and the tenure. The defaults are an example, not a live rate.
- If you only know the car's price, use the on-road price panel below to find the loan after your down payment, then open it in the calculator.
- Add your take-home pay to check the EMI is comfortable.
- Try a prepayment, such as a bonus in year two, to see the interest saved.
- Add each dealer or bank offer to the comparison table to find the cheapest.
Car loan EMI at 9.5% (example rate)
| Loan amount | 3 years | 4 years | 5 years | 7 years |
|---|---|---|---|---|
| ₹4,00,000 | ₹12,813 | ₹10,049 | ₹8,401 | ₹6,538 |
| ₹6,00,000 | ₹19,220 | ₹15,074 | ₹12,601 | ₹9,806 |
| ₹8,00,000 | ₹25,626 | ₹20,099 | ₹16,801 | ₹13,075 |
| ₹10,00,000 | ₹32,033 | ₹25,123 | ₹21,002 | ₹16,344 |
| ₹15,00,000 | ₹48,049 | ₹37,685 | ₹31,503 | ₹24,516 |
EMIs on the reducing-balance method. Your rate depends on the lender, the car, your income and your credit score.
On-road price, down payment and loan amount
The ex-showroom price is what the dealer advertises. The on-road price adds road tax and registration, insurance and any accessories or extended warranty, and is usually what the loan is based on. Your loan is the on-road price less your down payment.
Lenders often fund 80–90% of the on-road price for a new car. Putting down more lowers the EMI and the interest, and keeps the loan below what the car would fetch if you sold it in the first couple of years.
How tenure changes the cost of ₹8 lakh
| Tenure | EMI | Total interest | Total repaid |
|---|---|---|---|
| 3 years | ₹25,626 | ₹1,22,549 | ₹9,22,549 |
| 4 years | ₹20,099 | ₹1,64,728 | ₹9,64,728 |
| 5 years | ₹16,801 | ₹2,08,089 | ₹10,08,089 |
| 7 years | ₹13,075 | ₹2,98,316 | ₹10,98,316 |
A 7-year loan has a lower EMI, but you pay ₹90,226 more interest than over 5 years, and you may still owe money when the car is due for replacement.
New car vs used car loans
- New car loans have the lowest rates, often with dealer or manufacturer offers. Compare the rate, not just the EMI.
- Used car loans usually cost more, are shorter, and are based on the lender's valuation of the car rather than the asking price.
- Watch for a flat rate quote: a 9% flat rate over 5 years is about a 15.7% reducing rate. Convert it with the flat vs reducing rate calculator.
- Add the processing fee and any insurance bundled into the loan when you compare offers.
Frequently asked questions
How is car loan EMI calculated?
On a reducing balance: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1), with r the monthly rate and n the months. For ₹8 lakh at 9.5% over 5 years the EMI is about ₹16,801. Some dealers quote a flat rate instead, which looks lower but costs much more; check with the flat vs reducing rate calculator.
How much down payment do I need for a car loan?
Lenders typically finance up to 80–90% of the on-road price for a new car, and some go higher for salaried borrowers with good credit. For a used car the loan is usually a lower share of the valuation. A down payment of at least 20% keeps the EMI and interest down and stops the loan exceeding the car's resale value.
What tenure should I choose for a car loan?
Most lenders offer 1 to 7 years. A shorter tenure costs far less: ₹8 lakh at 9.5% costs ₹2,08,089 in interest over 5 years but ₹2,98,316 over 7. Because a car loses value every year, try to finish the loan within about 5 years.
Are used car loans more expensive?
Yes. Used car loans usually carry higher rates and shorter tenures than new car loans. On ₹5 lakh over 5 years, 9.5% gives an EMI of ₹10,501 and 13% gives ₹11,377, a difference of ₹52,536 in interest. These rates are only examples; get quotes from your bank.
Can I prepay or foreclose a car loan?
Yes, but most car loans are fixed-rate, and lenders may charge a foreclosure or part-prepayment fee on fixed-rate loans as per the loan agreement and key facts statement. RBI's Pre-payment Charges Directions, 2025 bar such charges only on floating-rate loans to individuals for non-business use (for loans sanctioned or renewed from 1 January 2026). Check the charge before prepaying.
Do I get a tax benefit on a car loan?
Not for a car used personally. A self-employed person using the car for business can claim interest and depreciation as business expenses. The deduction for electric vehicle loan interest (old section 80EEB, up to ₹1.5 lakh a year) applies only to loans sanctioned between 1 April 2019 and 31 March 2023, so new loans do not qualify.