Car Loan EMI Calculator
Enter the car's on-road price, your down payment, and loan terms to see the EMI and true cost of the loan.
Runs entirely in your browser — your numbers never leave this page.
How it works
A car loan EMI follows the standard amortisation formula on the financed amount (on-road price minus down payment):
EMI = P × r × (1+r)n ÷ ((1+r)n − 1)
- Down payment: banks finance 80–100% of the on-road price. A bigger down payment means a smaller loan and less interest — 20% down is a healthy norm.
- Tenure trap: stretching to 7 years cuts the EMI but can add 30–40% more interest versus 5 years. Match tenure to how long you'll keep the car.
- Depreciation vs loan: new cars lose ~15–20% in year one. With a small down payment and long tenure, you can owe more than the car is worth ("underwater") for years.
- No tax benefit on car loan interest for salaried individuals — only business owners claiming the car as a business asset get relief.
- Compare the total cost (price + interest), not just the EMI — a "low EMI" 7-year loan is the most expensive way to buy.
Frequently asked questions
How is car loan EMI calculated?
EMI = P × r × (1+r)^n ÷ ((1+r)^n − 1) on the loan amount (price minus down payment). A Rs 10 lakh loan at 9.5% for 5 years gives an EMI of about Rs 21,000.
How much down payment should I make?
At least 20% is the healthy norm — it keeps you clear of being "underwater" (owing more than the car's value) given how fast new cars depreciate.
Is a longer car loan tenure better?
Lower EMI, much higher total interest. A 7-year loan can cost 30–40% more in interest than a 5-year one. Pick the shortest tenure whose EMI fits your budget.
Is car loan interest tax-deductible?
Not for salaried individuals. Only if the car is a business asset (self-employed/professional) can interest and depreciation be claimed as business expenses.
Should I take a car loan or pay cash?
If your investments reliably earn more than the loan rate, financing can make sense. But cars depreciate — paying cash avoids interest on a falling asset entirely.
What is hypothecation?
The bank registers a lien on the car (noted on the RC) until the loan is repaid. You need a loan-closure NOC from the bank to remove it when selling.
Can I prepay my car loan?
Yes — most banks allow it after 6–12 months, sometimes with a 2–5% foreclosure charge. Check your loan agreement; floating-rate auto loans from banks usually have no prepayment penalty.
New vs used car loan rates?
Used-car loans run 2–4% higher than new-car loans, with lower loan-to-value (70–85%). Factor the rate gap into the new-vs-used math.
What credit score do I need?
750+ gets the best rates. Below 700, expect higher rates or a bigger down payment demand. Check your CIBIL report before applying.
Are festive "zero down payment" offers good?
They maximize the loan — and the interest. 100% financing on a depreciating asset is the fastest route to being underwater. A real down payment is almost always smarter.