Car Loan Calculator
Calculate your car loan EMI, total interest, and total repayment. Plan your vehicle purchase with accurate cost estimates for new and used cars.
* All calculations are approximate.
How Car Loan EMI Works?
Calculate your car loan EMI, total interest, and total repayment. Plan your vehicle purchase with accurate cost estimates for new and used cars.
Car loan EMI is calculated based on the vehicle loan amount, interest rate, and chosen tenure.
Each monthly installment includes both principal repayment and interest on the outstanding balance.
Unlike the car's value which depreciates, the EMI remains fixed throughout the loan tenure.
Choosing a shorter tenure increases the monthly EMI but significantly reduces the total interest paid.
Formula Used
EMI = P × r × (1+r)^n / ((1+r)^n – 1)
Where P = Car loan principal, r = Monthly interest rate, n = Number of monthly installments
Important — Read Before You Decide
- Cars depreciate 15–20% in the first year itself — your asset loses value while you pay interest on it
- Comprehensive motor insurance is mandatory for the loan tenure and adds ₹15,000–₹50,000 annually to ownership cost
- Used car loans carry 2–4% higher interest rates than new car loans and shorter maximum tenures
- Dealers often inflate the ex-showroom price in loan applications — always verify the on-road price independently
- Banks finance only 80–90% of the on-road price — you need 10–20% as down payment plus registration and insurance
- Car loan interest is NOT tax deductible for personal use — only business vehicles qualify under Section 43(1)
- Extended warranty and accessories sold at the dealership are often overpriced — compare market rates before adding them to your loan
What Happens If You Ignore These?
- A longer tenure reduces EMI but significantly increases total interest — a 7-year loan costs 25–40% more than a 3-year loan in interest
- Defaulting on car loan EMIs leads to vehicle repossession without court order under the hypothecation agreement
- The car's resale value drops faster than your outstanding loan balance, leaving you in negative equity for the first 2–3 years
- Adding accessories, insurance, and extended warranty to the loan amount inflates your total cost by lakhs
- Not accounting for fuel, maintenance, and insurance means the true monthly cost of owning a car is 1.5–2x the EMI
Smart Tips
- Pay the maximum down payment you can afford — even 30–40% down saves significantly on interest
- Choose a 3–5 year tenure instead of the maximum 7 years to minimize total interest paid
- Get loan pre-approval from your bank before visiting the dealership — dealer-arranged financing often has higher rates
- Compare the total cost of ownership (EMI + insurance + fuel + maintenance) before deciding your budget
- Consider certified pre-owned cars — they cost 30–50% less with manufacturer warranty and lower insurance premiums
- Negotiate the on-road price separately from the financing — dealers bundle markups into loan-linked deals
Frequently Asked Questions
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