How a car loan EMI is calculated
Your loan is the on-road price minus your down payment. Banks then work out the EMI on a reducing balance:
EMI = P × r × (1 + r)ⁿ ÷ ((1 + r)ⁿ − 1)
- P = on-road price − down payment
- r = annual interest rate ÷ 12 ÷ 100
- n = tenure in months
Example: a car with an on-road price of ₹9,00,000 and a 20% down payment (₹1,80,000) needs a loan of ₹7,20,000. At 9% for 5 years the EMI is ₹14,946 and the total interest ₹1,76,761.
How to use this car loan calculator
- Enter the on-road price — ex-showroom price plus registration, insurance and other charges. Most lenders finance a share of the on-road price.
- Set your down payment as a percentage of the price, or switch to enter it in rupees.
- Enter the interest rate and choose the tenure (car loans usually run 1 to 7 years).
- Add the lender's processing fee to see the true cost of borrowing.
- Check the total cost of the car — down payment, all EMIs and the fee together — and the year-wise schedule below.
Car loan EMI by tenure
| Tenure | Monthly EMI | Total interest |
|---|---|---|
| 3 years | ₹22,260 | ₹1,01,353 |
| 4 years | ₹17,420 | ₹1,36,137 |
| 5 years | ₹14,531 | ₹1,71,851 |
| 7 years | ₹11,262 | ₹2,46,038 |
Stretching the same loan from 3 to 7 years lowers the EMI by about half but costs ₹1.45 lakh more in interest — and a car loses value fast, so a long tenure can leave you owing more than the car is worth.
Tips to get a better car loan
- Put down at least 20%. You borrow less, pay less interest, and many lenders offer better rates.
- Follow the 20/4/10 rule of thumb: 20% down, a tenure of 4 years or less, and total vehicle costs (EMI, fuel, insurance) under 10% of your monthly income.
- Compare the dealer's financing with your own bank's offer. Check the processing fee, foreclosure charges and any insurance bundled into the loan.
- Mind your credit score. A score above 750 usually gets the lowest rates.
- Ask about prepayment. Fixed-rate car loans often carry a foreclosure charge, so check it before signing if you plan to repay early.
Documents usually needed
- Identity and address proof (Aadhaar, PAN, passport or voter ID)
- Income proof: last 3 months' salary slips and Form 16, or 2 years' ITR for the self-employed
- Last 6 months' bank statements
- Proforma invoice or quotation from the dealer
Frequently asked questions
What is the EMI for a ₹7 lakh car loan for 5 years?
At 9% a year the EMI is ₹14,531 and the total interest ₹1,71,851. Use the calculator to try other rates and tenures.
How much down payment do I need for a car loan?
Many lenders finance up to 80–90% of the on-road price (some up to 100% of the ex-showroom price for eligible buyers). A down payment of 20% or more keeps your EMI and total interest lower.
What is the maximum tenure of a car loan?
Most banks offer new car loans for up to 7 years; used car loans are usually shorter.
Is the car loan interest rate fixed or floating?
Most car loans in India have a fixed rate, so the EMI stays the same for the whole tenure. Some banks also offer floating-rate car loans linked to their benchmark rate.
Does the EMI include insurance and the processing fee?
No. The EMI is principal plus interest only. This calculator adds the processing fee separately to show the total cost of the car.