Tools To India

Car Loan EMI Calculator

Enter the on-road price, what you are paying up front, the rate and the tenure to see your instalment and the true interest cost of financing a vehicle.

Last updated

₹10 Lakh

₹2 Lakh · The part you pay yourself, up front.

Ask for the reducing-balance rate. Dealers often quote a flat rate, which is far higher in real terms.

Car loans usually run three to seven years.

The result updates as you type. Nothing you enter is saved, sent to a server or shared.

Monthly EMI

₹16,801.49

5 years at 9.5% a year, on a monthly reducing balance

What you repay

  • Principal: ₹8,00,000
  • Interest: ₹2,08,089
Price
₹10,00,000
Down payment
−₹2,00,000
Loan amount
₹8,00,000
Total interest payable
₹2,08,089
Total amount payable
₹10,08,089
Interest as a share of what you repay
20.64%
  • Assumes a fixed rate for the whole tenure and that every instalment is paid on time.
  • Processing fees, documentation charges, insurance premiums and GST on fees are not included — ask your lender for the annual percentage rate covering all of them.

Year-by-year repayment schedule

Year-by-year repayment schedule
YearPrincipal paidInterest paidBalance left
1₹1,31,234₹70,383₹6,68,766
2₹1,44,259₹57,359₹5,24,506
3₹1,58,576₹43,041₹3,65,930
4₹1,74,315₹27,303₹1,91,615
5₹1,91,615₹10,003₹0

How this calculator works

A car loan is secured against the vehicle, so rates sit between a home loan and a personal loan. Lenders finance a share of the on-road price and expect you to fund the rest, which is why this calculator starts from the price and your down payment rather than the loan amount.

The single most common mistake in vehicle financing is comparing a flat rate with a reducing-balance rate. Under a flat rate, interest is charged on the full original amount for the entire tenure, even though you have repaid most of it. A flat 8% over five years works out to roughly 14–15% on a reducing balance. Always ask which one you are being quoted.

A car is a depreciating asset, so the loan outstanding can exceed the resale value for much of the early tenure. A larger down payment and a shorter tenure both reduce how long you spend in that position.

The formula

Equated monthly instalment

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

P
Principal — the amount actually disbursed to you
r
Monthly interest rate = annual rate ÷ 12 ÷ 100
n
Tenure in months

Every retail lender in India quotes EMI on a monthly reducing balance. Interest for a month is charged on the balance outstanding at the start of that month, so the interest portion of each instalment falls and the principal portion rises, even though the instalment itself never changes.

How one instalment splits

Interest this month = outstanding balance × r Principal this month = EMI − interest this month

This is why the early years of a long loan barely dent the principal. On a 20-year home loan, roughly two-thirds of the first instalment is interest.

Worked example: ₹8 lakh at 9.5% for 5 years

Meera buys a car with an on-road price of ₹10,00,000, pays ₹2,00,000 up front and finances ₹8,00,000 at 9.5% for 60 months.

Step-by-step calculation for the worked example
On-road price₹10,00,000
Down payment₹2,00,000
Loan amount₹8,00,000
Rate9.5% a year
Tenure60 months
EMI₹16,801
Total repaid₹10,08,057
Total interest₹2,08,057

The car costs Meera ₹12,08,057 in total once financing is counted. Raising the down payment to ₹3,00,000 cuts the interest to about ₹1.82 lakh and the EMI to roughly ₹14,701.

Things worth knowing

  • Comprehensive insurance is compulsory while the vehicle is hypothecated, and lenders often bundle a policy. Compare the premium against buying cover yourself; bundled policies are frequently more expensive.
  • The vehicle is hypothecated to the lender until the loan closes. Get the no-objection certificate and have the hypothecation removed from the registration certificate after the final instalment, or you will not be able to sell the vehicle cleanly.
  • Zero-interest or subvention schemes are usually funded by a reduced discount, a higher processing fee, or an inflated ex-showroom price. Compare the total outgo against a cash purchase before assuming the finance is free.
  • Financing accessories, extended warranties and insurance into the loan means paying interest on them for years. Pay for those in cash where you can.
  • For a used car, the rate is typically higher and the tenure shorter, because the collateral is worth less and depreciates faster.

Frequently asked questions

How much down payment should I make on a car?
Lenders often finance most of the ex-showroom price but rarely the full on-road price, so a down payment is unavoidable. Beyond the minimum, a larger down payment reduces both interest and the period during which you owe more than the car is worth. Many buyers target at least 20%.
Is a flat rate cheaper than a reducing-balance rate?
No — it is almost always considerably more expensive, and the low headline number is what makes it attractive. Under a flat rate, interest is charged on the original amount throughout, so you pay interest on principal you have already repaid. Convert any flat quote to its reducing-balance equivalent before comparing.
Can I prepay a car loan?
Usually yes, subject to a lock-in period and a foreclosure charge on the outstanding principal. Check the exact terms in the loan agreement. Prepaying early saves the most, because the early instalments carry the highest interest component.
Should I take a longer tenure to afford a bigger car?
That is how people end up owing more than the vehicle is worth. Over a seven-year loan a car will have lost most of its value long before the last instalment. If the EMI only fits at seven years, the honest conclusion is usually that the car is beyond the current budget.

Sources

Every figure on this page is traceable to the official source below. If a source has changed since the date shown, please tell us and we will correct it.