Calculate your car loan EMI, total interest and year-wise repayment from the financed amount, rate and tenure (rates 8.5–15%, as of indicative ranges 2026 — verify with your lender).
How this car loan EMI calculator works
A car loan EMI is computed on a reducing balance, just like any other loan. The amount you finance is the on-road price minus your down payment:
EMI = P × i × (1 + i)n ÷ [ (1 + i)n − 1 ]
where P is the financed amount, i the monthly rate (annual ÷ 12) and n the number of months. The year-wise table shows the principal and interest split across the term.
Worked example: ₹8 lakh for 7 years at 9.5%
Financing ₹8,00,000 at 9.5% over 7 years gives an EMI of ₹13,075. You repay ₹10,98,316 in total — the ₹8 lakh principal plus ₹2,98,316 (₹2.98 lakh) of interest. Shortening the tenure raises the EMI but cuts that interest sharply.
On-road vs ex-showroom price
The ex-showroom price is just the base car cost plus GST and cess. The on-road price adds road tax (RTO), registration, insurance and handling — typically 10–15% more. You borrow against the on-road price, so always run the EMI on the on-road figure. A ₹10 lakh on-road car with a 20% down payment of ₹2,00,000 leaves ₹8 lakh to finance, which is the example above.
How much down payment to make
Lenders finance roughly 80–90% of the on-road price. A larger down payment cuts the EMI, lowers total interest, and — crucially for a car — keeps you from owing more than the vehicle is worth. Cars depreciate fast in the first two to three years, so a healthy down payment plus a shorter tenure keeps your loan balance below the car's resale value.
Loan or cash?
Unlike a home loan against an appreciating asset, a car loan finances something that loses value, with no tax break. If you can build the amount in an FD or SIP and buy in cash, you skip the interest entirely. If you do finance, keep the tenure to 3–5 years and the down payment high so the interest stays modest.
Frequently Asked Questions
How is car loan EMI calculated?
Car loans use the standard reducing-balance EMI formula: EMI = P × i × (1+i)n ÷ [(1+i)n − 1], where P is the financed amount, i the monthly rate (annual ÷ 12) and n the months. The financed amount is the on-road price minus your down payment, so a bigger down payment directly lowers the EMI.
Ex-showroom vs on-road price — which do I finance?
You finance the on-road price, not the ex-showroom price. On-road = ex-showroom + GST + cess + road tax (RTO) + insurance + registration and any handling charges. Road tax and insurance alone can add 10–15% to the ex-showroom figure, so always run the EMI on the on-road number you will actually pay.
How much down payment should I make on a car loan?
Lenders typically finance 80–90% of the on-road price, so a 10–20% down payment is standard. On a ₹10,00,000 on-road car, 20% down is ₹2,00,000, leaving ₹8,00,000 to finance. A larger down payment cuts both the EMI and total interest — and reduces the gap to the car's fast depreciation in the first years.
What is the typical car loan interest rate?
New-car loans usually run 8.5%–15% per annum depending on the lender, your credit score and the tenure. Used-car loans are priced higher because the asset depreciates faster. A CIBIL score above 750 and a salaried profile fetch the lower end of the range. Always confirm the current rate with the lender (as of indicative ranges 2026 — verify with your lender).
What car loan tenure should I choose?
Car loans run 1–7 years. A longer tenure lowers the EMI but means you may owe more than the car is worth for much of the term, since cars depreciate quickly. A 3–5 year tenure usually balances an affordable EMI against not being "underwater" on a fast-depreciating asset. Use the tenure input to see the trade-off.
Can I prepay or foreclose a car loan?
Yes. Floating-rate car loans generally allow penalty-free prepayment; fixed-rate loans may charge a small foreclosure fee (often 3–6% of the outstanding) after a lock-in. Because early EMIs are interest-heavy, prepaying in the first couple of years saves the most. Check your loan agreement for the exact terms.
Is a car loan or paying cash better?
A car is a depreciating asset, so financing it adds interest cost to something losing value — the opposite of a
home loan. If you have the cash and no higher-return use for it, buying outright avoids interest entirely. If financing, keep the tenure short and the down payment high to limit the interest you pay on a depreciating purchase.
Estimates are for information and education only — not financial, tax or investment advice. Verify current rates and rules with official sources.