Car Loan EMI Calculator

What is a car loan EMI?

A car loan EMI is the fixed monthly amount you repay to the bank or NBFC that financed your car. It covers interest on the outstanding balance plus part of the principal, so that the loan is fully repaid by the end of the tenure — usually three to seven years.

This car loan EMI calculator starts from the car’s on-road price and your down payment, and shows the EMI, the total interest, the full amortisation schedule and the true total cost of the car once every EMI and the processing fee are counted. You can switch to entering the loan amount directly if you already know it.

How this calculator works

Enter the on-road price and the down payment you plan to make (or the loan amount), the interest rate and the tenure. The calculator finances the balance and applies the standard reducing-balance EMI formula used by banks for car loans.

Interest is charged each month on the balance you still owe, so early EMIs are interest-heavy and later ones mostly repay principal. The schedule shows exactly how much of each EMI goes where.

Add the processing fee to see the effective annual cost (APR) of the loan. Use it to compare offers: a lower rate with a higher fee can cost more than it looks.

Formula

        P × r × (1 + r)ⁿ
EMI = ──────────────────────
          (1 + r)ⁿ − 1

P = loan amount    r = annual rate ÷ 12 ÷ 100    n = tenure in months

Worked example

1. A car with an on-road price of ₹10,00,000 and a 20% down payment of ₹2,00,000, so the loan is ₹8,00,000.
2. At 9% a year for 5 years (60 months), the monthly rate is 9 ÷ 12 ÷ 100 = 0.0075.
3. EMI ≈ ₹16,607. Total repaid ≈ ₹9,96,401, of which ₹1,96,401 is interest.
4. With a 0.5% processing fee plus GST (₹4,720), the effective annual cost rises to about 9.25%.

Car loan EMI for common loan amounts

EMIs at 9% a year over 5 years. Change the rate and tenure in the calculator for your offer.

Choosing the tenure: 3, 5 or 7 years?

A car loses value every year while the loan balance falls slowly at first. A long tenure keeps the EMI low but means you may owe more than the car is worth for several years, and you pay noticeably more interest.

A popular rule of thumb is 20/4/10: put down at least 20%, borrow for no more than 4 years, and keep all car costs — EMI, fuel, insurance and maintenance — under 10% of your gross monthly income. It is deliberately conservative, but it keeps a car from straining your budget.

New car vs used car loans

Used-car loans are riskier for lenders, so they usually carry higher rates, lower loan-to-value ratios and shorter tenures, often capped so that the car is no more than 8–10 years old at the end of the loan. An ₹8 lakh used-car loan at 12% for 5 years costs about ₹17,796 a month and ₹2.68 lakh in interest — roughly ₹71,000 more than the same loan at 9%.

Watch out for flat-rate offers

Dealers and some finance companies quote a “flat” interest rate, where interest is charged on the original loan for the whole tenure instead of on the reducing balance. A 5% flat rate over 5 years is roughly equal to a 9% reducing-balance rate. Always ask for the reducing-balance rate or the APR in the Key Fact Statement, or convert a flat rate with the flat vs reducing rate calculator.

Costs beyond the EMI

• Processing and documentation fees, plus 18% GST on them.
• Motor insurance every year — comprehensive cover is compulsory while the car is hypothecated to the lender.
• Prepayment or foreclosure charges: many fixed-rate car loans charge 2%–6% of the outstanding amount if you close early, and some allow part-payments only after 6–12 EMIs.
• Hypothecation removal: after the last EMI, collect the lender’s No Objection Certificate and Form 35 and apply to the RTO to remove the hypothecation from your registration certificate.

Is car loan interest tax deductible?

Not for a car bought for personal use by a salaried person. A self-employed person or business that uses the car for work can usually claim the interest and depreciation as business expenses. The Section 80EEB deduction for electric-vehicle loans applied only to loans sanctioned between 1 April 2019 and 31 March 2023.

Assumptions & important notes

Frequently asked questions