Car Loan EMI Calculator - Free Online

Loan Amount

₹

₹50,000₹50,00,000

Annual Interest Rate

% p.a.

720

Loan Tenure

yrs

Monthly EMI

₹0

Principal Amount

₹0

Total Interest

₹0

Total Amount Payable

₹0

Interest as % of Principal

0.00%

Loan Breakdown

Principal vs interest split

Principal

₹0

Total Interest

₹0

Total Payable

₹0

What is a Car Loan?

A Car Loan EMI Calculator computes your Equated Monthly Instalment — the fixed amount you pay to your lender each month until the vehicle loan is fully repaid. Like all term loans, a car loan EMI has two components in every payment: an interest charge on the outstanding principal and a principal repayment. In the early months, the interest share is dominant; it decreases steadily as the outstanding balance reduces each month.

Car loans are one of the most common retail loans in India. New car prices range from ₹5 lakh for an entry-level hatchback to ₹50 lakh or more for premium SUVs, and most buyers finance 70%–100% of the on-road price. Loan tenures run from 1 to 7 years, and interest rates for new cars typically sit between 8% and 12% p.a. depending on the lender and your credit profile. Even a modest ₹7 lakh loan at 10% for 5 years costs ₹14,873 per month — and the total repayment of ₹8.92 lakh means you pay ₹1.92 lakh in interest on a ₹7 lakh principal.

Car loans differ from home loans in three important ways. First, tenures are much shorter — typically 3–7 years compared to 15–30 years for a home loan (you can compare the two using our Home Loan EMI Calculator). Second, the interest rates are higher, reflecting the fact that a vehicle is a depreciating asset rather than appreciating property. Third, car loan interest is generally not tax deductible for personal use, unlike home loan interest which qualifies for deductions under Section 24(b).

The reducing-balance method applies here, as mandated by RBI for all scheduled commercial bank loans — interest each month is charged only on the outstanding principal, not the original loan amount. This makes the EMI fixed and predictable even as the interest and principal components within it shift every month.

Understanding your EMI accurately before committing to a vehicle is essential. The on-road price of a car often exceeds the ex-showroom price by 15%–25% once GST, road tax, registration, and insurance are added — and the loan amount you need is based on the on-road figure, not the showroom sticker.

How to use this Car Loan calculator

Enter your Loan Amount — the total amount you intend to borrow, not the on-road price of the car. Subtract your planned down payment from the on-road price to arrive at this figure. For example, if the on-road price is ₹9 lakh and you plan to pay ₹2 lakh upfront, your loan amount is ₹7 lakh. Adjust the slider to test different down payment scenarios.
Set the Annual Interest Rate — enter the rate your bank or NBFC has quoted, in percent per annum. New car loans from major Indian banks currently range from 8.5% to 12% p.a. for salaried borrowers. If your lender quotes a flat rate rather than a reducing-balance rate, do not use it here — flat-rate and reducing-balance EMIs are computed differently.
Choose the Loan Tenure — the repayment period in years, from 1 to 7. Drag the slider between extremes to see how the EMI and total interest change. Most buyers settle for 5 years as a balance between a manageable EMI and reasonable total interest.
Read the Monthly EMI — the result updates immediately. Ensure this EMI, combined with your existing loan obligations, stays within 40–50% of your net monthly income. If it is too high, either increase the down payment (reduce loan amount) or extend the tenure slightly.
Check the Loan Breakdown card — the donut chart shows the principal vs total interest split visually. The "+X% extra cost" figure at the centre tells you the total interest as a percentage of the principal. For most 5-year car loans, this sits between 20%–30%; for 7-year loans, it rises above 35%–40%.
Review the Amortisation Schedule — scroll down to see the year-by-year repayment table, or switch to Monthly view for a detailed month-by-month breakdown. Use this to identify the best moment for a lump-sum prepayment if you are expecting a bonus or incentive payout.

Formula & Methodology

Car loan EMI is calculated using the standard reducing-balance formula:

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

Where:
- P = Principal loan amount (₹)
- r = Monthly interest rate = Annual rate ÷ 12 ÷ 100
- n = Total instalments = Tenure in years × 12

Worked example — ₹7 lakh car loan at 10% p.a. for 5 years:

Monthly rate (r) = 10 ÷ 12 ÷ 100 = 0.008333Total months (n) = 5 × 12 = 60
EMI = 7,00,000 × 0.008333 × (1.008333)⁶⁰ ÷ [(1.008333)⁶⁰ − 1]    = 7,00,000 × 0.008333 × 1.6453 ÷ (1.6453 − 1)    = 7,00,000 × 0.013711 ÷ 0.6453    ≈ ₹14,873 per month

Total repayment: ₹14,873 × 60 = ₹8,92,380Total interest: ₹8,92,380 − ₹7,00,000 = ₹1,92,380Interest as % of principal: ₹1,92,380 ÷ ₹7,00,000 × 100 = 27.5%

Amortisation methodology: Each month, interest = outstanding balance × monthly rate. Principal component = EMI − interest. Outstanding balance reduces by the principal component. On the final payment, any rounding difference is absorbed so the balance closes to exactly zero.

Assumptions:
- Interest is calculated on reducing balance (standard for all scheduled bank car loans in India per RBI guidelines)
- EMI is fixed for the full tenure (fixed-rate loan assumption)
- Processing fees, insurance premiums, road tax, and registration charges are not included
- No prepayment penalties are modelled; actual prepayment charges vary by lender and loan agreement

Frequently Asked Questions

What is a car loan EMI and how is it calculated?

A car loan EMI (Equated Monthly Instalment) is the fixed monthly amount you pay your lender until the vehicle loan is fully repaid. It is computed using the reducing-balance formula: EMI = P × r × (1+r)ⁿ ÷ [(1+r)ⁿ − 1], where P is the loan principal, r is the monthly interest rate, and n is the total number of months. Each EMI contains an interest component and a principal repayment component; the interest share is highest in the first month and gradually reduces as the outstanding balance falls.

What is the current car loan interest rate in India?

Car loan interest rates in India typically range from 8% to 14% p.a. for new cars and 12% to 18% p.a. for used or pre-owned vehicles, as of 2025. Public sector banks like SBI and Bank of Baroda tend to offer lower rates (around 8.7%–9.5% p.a.) for salaried borrowers with good credit scores, while private banks and NBFCs may charge slightly more. Your actual rate depends on your CIBIL score, income, loan-to-value ratio, and the lender's current pricing.

What is the difference between a new car loan and a used car loan?

New car loans typically carry lower interest rates (8%–11% p.a.), higher loan-to-value ratios (up to 100% of on-road price with some lenders), and longer permissible tenures (up to 7 years). Used car loans attract higher rates (12%–18% p.a.) because the vehicle's value depreciates faster, increasing the lender's risk. Lenders also generally cap used car loan amounts at 80%–85% of the vehicle's current valuation, requiring a larger down payment from the buyer.

How much car loan EMI can I afford on a ₹60,000 monthly salary?

Most banks require your total EMI obligations to stay within 40–50% of your net monthly income. On a ₹60,000 take-home salary, your combined EMIs (car loan plus any existing home loan, personal loan, or credit card dues) should ideally not exceed ₹24,000–₹30,000. Adjust the Loan Amount slider in this calculator until the car loan EMI, combined with your existing obligations, stays within that limit.

Should I choose a shorter or longer car loan tenure?

A shorter tenure (3 years vs 7 years) means a higher monthly EMI but significantly lower total interest. For example, a ₹7 lakh car loan at 10% p.a. over 3 years costs ₹22,584/month with ₹1.33 lakh total interest; the same loan over 7 years costs ₹11,618/month but ₹2.76 lakh total interest — more than double. Choose the shortest tenure your monthly budget can comfortably absorb to minimise the total cost of ownership.

Is car loan interest tax deductible in India?

Car loan interest is generally not tax deductible for salaried individuals purchasing a vehicle for personal use. However, if the vehicle is used exclusively for business purposes, the interest paid on the car loan can be claimed as a business expense under the head 'Profits and Gains of Business or Profession'. Self-employed professionals and business owners should consult a chartered accountant to confirm eligibility and maintain proper documentation.

Can I prepay my car loan before the tenure ends?

Yes, most lenders allow car loan prepayment, but unlike home loans, car loans may carry a prepayment penalty of 2%–5% of the outstanding principal, especially within the first 6–12 months of the loan. After that, penalties are often waived or reduced. Always check your loan agreement for prepayment terms before making a lump-sum payment. Prepaying in the early years saves the most interest since the outstanding principal — and therefore the monthly interest charge — is highest at that stage.

What is the difference between ex-showroom price and on-road price for a car loan?

The ex-showroom price is the manufacturer's base price before taxes and other charges. The on-road price includes GST (28% for most passenger vehicles plus a cess), road tax (varies by state, typically 6%–15% of vehicle value), registration fees, insurance, and accessories. On-road price is typically 15%–25% higher than ex-showroom price. Lenders fund a portion of the on-road price; knowing the full on-road cost helps you size your loan and down payment correctly.

How does a down payment affect my car loan EMI?

A higher down payment directly reduces the loan principal, which lowers both the monthly EMI and the total interest paid. For a car with an on-road price of ₹10 lakh, a 20% down payment (₹2 lakh) means you borrow ₹8 lakh; a 40% down payment (₹4 lakh) means you borrow only ₹6 lakh — reducing the EMI at 10% over 5 years from ₹16,998 to ₹12,748 per month and saving approximately ₹2.55 lakh in total interest.

How do I compare car loan offers from different banks?

Enter the same loan amount and tenure for each bank's quoted rate using this calculator and compare the resulting Monthly EMI and Total Interest Paid side by side. A 0.5% rate difference on a ₹7 lakh, 5-year loan translates to roughly ₹175 less per month — and ₹10,500 less in total interest. Also compare the processing fee (usually 0.5%–1% of loan amount), prepayment terms, and insurance bundling requirements, not just the headline interest rate.

What is the minimum CIBIL score required for a car loan in India?

Most banks in India require a minimum CIBIL score of 700–720 to qualify for a car loan at their standard rates. A score above 750 typically unlocks the best rates and faster approvals. Scores below 650 may lead to rejection or loans being offered only at higher rates through NBFCs. Improving your CIBIL score before applying — by clearing existing overdue amounts and avoiding multiple loan applications simultaneously — can meaningfully lower your car loan interest rate.

How does my car loan EMI affect my ability to take a home loan?

When you apply for a home loan, lenders include your existing car loan EMI in their Fixed Obligation to Income Ratio (FOIR) calculation, which typically caps at 40–50% of net income. A high car loan EMI directly reduces the home loan amount you are eligible for. If you are planning to buy a home in the near future, it is worth either reducing your car loan tenure to clear it faster or opting for a lower car loan amount to preserve your home loan eligibility.